Introduction
The Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023 was introduced in the Lok Sabha on August 01, 2023 and in the Rajya Sabha on August 03, 2023. It received the presidential assent on August 10, 2023 and became an act. This act seeks to administer mining in maritime zones of our country and amends the Offshore Areas Mineral (Development and Regulation) Act, 2002 (OAMDR Act). Under the 2023 Amendment Act, the private sector would be granted two types of operating rights via auction by competitive bidding. These include production lease and composite licence. The Amendment Act also aims to bring about some critical reforms in the offshore mining sector of our country.
Though the OAMDR Act, 2002 was implemented in 2010, there has not been any mining activity carried out in the offshore regions so far. Therefore, the Amendment Act of 2023 has been introduced by the central government to reform the offshore mining sector.
Why the Need
Under the OAMDR Act of 2002, there is no provision for just and transparent allocation of operating rights in the offshore regions. Instead, the Act has a scope for discretion. In 2015, an amendment was made to the Mines and Minerals (Development and Regulation) Act, 1957 so that mineral concessions can be allocated in onshore areas with the help of auction. Thenceforth, there has been an auction of 286 mineral blocks to grant mining lease or composite licence. This transparency in the process has been advantageous in that the state governments have generated surplus revenue in the form of auction premiums. The Amendment Act of 2023 has initiated an auction regime, which may drive the offshore mining sector towards growth and development.
The maritime position of India is unique. The exclusive economic zone (EEZ) of our country extends above two million square kilometres. It consists of a considerable amount of recoverable resources. According to the Geological Survey of India (GSI), the resources of the following minerals in the offshore regions have been marked out:
- The EEZ of Gujarat and Maharashtra coasts consists of 1,53,996 million tonnes of lime mud.
- Off the coast of Kerala, around 745 million tonnes of construction-grade sand are found.
- In the mid-shelf and inner shelf of several states, namely, Andhra Pradesh, Odisha, Kerala, Maharashtra, and Tamil Nadu, around 79 million tonnes of heavy mineral placers are found.
- Phosphorite is found in the eastern and western continental margins.
- In the Andaman Sea and Lakshadweep Sea, polymetallic ferromanganese (Fe-Mn) nodules and crusts are there.
With the focus on becoming a high-growth economy, India must utilise its maritime resources optimally. For doing so, the Government of India must support both the public and private sectors to participate in offshore mining. By bringing the required expertise and technology, the private sector will conduct the exploration and mining of mineral resources available in the EEZ.
Key Provisions
Some major provisions of the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023 are explained below:
- Under the Amendment Act, offshore mining-related activities are categorised into
- reconnaissance, which includes the initial survey to find out the places where mineral resources are available;
- exploration, which consists of exploring, proving, and tracing mineral deposits; and
- production, which involves the extraction of minerals as a part of commercial activity.
- (The Act of 2002 provides for the following concessions:
- a reconnaissance permit for the purpose of reconnaissance;
- an exploration licence for the purpose of exploration; and
- a production lease for carrying out mining.)
- Under the Amendment Act of 2023, a composite licence has been introduced in order to grant rights for both exploration and production. With this licence, the licensee will have to finish exploration activity within three years. However, he/she may get an extension of two years for this activity by giving an application. Having found mineral resources, one or several production leases will be granted to the licensee for the explored area.
- With the single composite licence, the maximum area that can be used for carrying out exploration is 30 minutes latitude by 30 minutes longitude. While the maximum area that can be used for carrying out production is 15 minutes latitude by 15 minutes longitude.
l Under the Amendment Act, 2023, there is a validity of 50 years for both a production lease and a production lease under a composite licence.
(Under the Act of 2002, the government initially grants a production lease for 30 years. Later, it can be renewed for 20 more years.)
- The Amendment Act of 2023 makes it mandatory for private entities to conduct competitive bidding for a production lease and a composite licence. Prior to the implementation of this Act, all the applications for production leases would be considered as ‘invalid’. Besides, an exploration licence to obtain a production lease on the explored area would be disqualified if it was granted before the implementation of the Amendment Act.
(Under the Act of 2002, concessions are granted through administrative allocation.)
- Under the Amendment Act, 2023, the government or a government company would be granted a composite licence or production lease by the concerned authority. Government companies can also undertake joint ventures, subject to certain conditions, such as
- a competitive process must be conducted to select the partner, and
- at least 74 per cent of the paid-up share capital must be owned by the government company.
(Under the Act of 2002, the government is authorised to reserve those offshore areas which are not controlled by any operating right.)
- Under the Amendment Act, 2023, only the government or government companies, such as PSUs, will be granted exploration, production, and composite licences if these are related to atomic minerals. The Mines and Minerals (Development and Regulation) Act, 1957 defines atomic minerals as
- rare earth minerals that are rarely found, such as uranium and thorium;
- uranium ores and pitchblende;
- monazite, uriniferous allanite, and other thorium minerals; and
- rare metals like tantalum, titanium, niobium, lithium, zirconium, and beryllium.
- The Amendment Act of 2023 provides that the size of a block for offshore mining should be one minute latitude by one minute longitude. It also states that an entity can obtain a maximum area of just 45 minutes latitude by 45 minutes longitude under every concession.
(The Act of 2002 provides that the standard area of a block for offshore mining should be five minutes latitude by five minutes longitude.)
- Under the Amendment Act of 2023, the Offshore Areas Mineral Trust will be established. Apart from any royalty, a fixed amount will be contributed by the concession holders to the Trust. This amount would be as per the exact rate specified by the central government and should not exceed one-third of the royalty. The funds thus collected would be utilised for
- exploring offshore areas;
- analysing the adverse effects on ecology due to offshore mining and how to tackle them; and
- facilitating relief measures in case of a disaster.
- Under the Amendment Act of 2023, the extent of fine for a number of offences has increased from Rs 5 lakh to Rs 10 lakh for the same offence as mentioned above.
(The Act of 2002 imposes a fine of around Rs 50,000 or imprisonment of up to 5 years, or both in case an entity is found guilty of undertaking an activity without a licence or permit.)
- For ease of doing business, the Amendment Act of 2023 provides for the transfer of composite licence, production lease and exploration licence easily.
Conclusion
The Amendment Act of 2023 provides for sustainable and reliable mining practices while harnessing India’s vast treasure of maritime resources. Besides, it liberates the offshore regions from all kinds of litigations along with creating a fund to explore these regions.
© Spectrum Books Pvt. Ltd.