To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?
The central government regulates mining and mineral development and the state government grants concessions and collects royalty and other fees when the mineral is located in land vested in the state. While earlier concessionary rights were granted on a first come, first serve basis, following the amendments in the 2015 concessions, all major minerals are granted through an auction. A private party who has a mining lease for particular minerals has full title, albeit with permitted end-use stipulations as may be applicable over these minerals.
There are large areas where mining rights are held by private parties, and in 2015 it was estimated that there were nearly 10,621 such private mines. In 2013, the Supreme Court conferred rights to mineral wealth on owners of surface rights rather than vesting them in the state, which has been upheld in recent judgments as well. However, the Supreme Court is yet to rule on certain aspects of ownership of minerals such as the liability of private owners to pay royalties to the state.
As part of the reforms, under the new regime, a landowner who wants to grant a prospecting licence or mining lease to a third party can do so only with state government authorisation. In cases of such private mining leases, the mining lessee must comply with the central government mining regulations as well as provide the state government with a security deposit for ensuring compliance with the mine closure plan.
Publicly available information and data
What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency, or securities commission regulating public companies, which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?
The National Mineral Inventory of the Indian Bureau of Mines provides a comprehensive overview of exploration, development and mining activities carried out in India by central and state governments, public-sector utilities and private agencies. The inventory provides mineral-wise and state-wise information with regard to location, infrastructure, geology, exploration, physical and chemical properties, freehold or leasehold status, etc.
The Geological Survey of India (GSI) carries out geological mapping and acquires geoscience data for the entire country. It generates and disseminates this information to other exploration agencies for accelerating the mineral exploration process.
Under the National Mineral Exploration Policy 2016, the GSI is required to provide all pre-competitive baseline geoscience data free of cost to parties. Other than the GSI, the Directorates of Geology and Mines of certain state governments, the Mineral Exploration Corporation Limited and other government-owned companies also carry out detailed exploration of mining areas and maintain information databases.
The National Mineral Exploration Trust has also been newly created to carry out regional and detailed exploration for minerals. In addition, the Indian Bureau of Mines provides information on the number of mines in operation and their mineral quality either at a cost or on a restricted access basis at its offices.
As regards reporting, a mineral concession holder is required to provide geophysical data relating to prospecting, mining and engineering to the GSI and the state government. All mines are also required to mandatory file returns with the Indian Bureau of Mines.
Acquisition of rights by private parties
What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence or more senior tenure? What are the requirements to convert to a mining licence?
A private party can apply for a reconnaissance permit, prospecting licence, a mining lease or a composite licence (prospecting licence-cum-mining lease).
Currently, mining leases and composite licences are only granted through a competitive bidding process. A composite licence holder has the right to move from prospecting to mining; however, a reconnaissance or prospecting licence holder is not entitled to a preferential claim for grant of a composite licence or mining lease.
Obligations of the rights holder include:
What is the regime for the renewal and transfer of mineral licences?
A mining lease is granted for a period of 50 years and cannot be renewed.
The state government may renew a prospecting licence (which is usually granted for three years) subject to a maximum of five years provided an application for the renewal is made 90 days before expiry.
A mining lease or composite lease obtained through auction can be transferred to a third party. Prior to the transfer, the parties are to jointly apply to the state government in the specified format. The state government is required to convey its decision within a period of 90 days of receipt of the application, failing which, the state government will be deemed to have no objection to such transfer. Following the transfer, the parties are to submit a duly registered transfer deed in the prescribed form to the state government.
Duration of mining rights
What is the typical duration of mining rights? Is there a requirement to relinquish a portion of the mining rights to the government after a certain number of years?
Mining leases are granted for 50 years, at the end of which, the mine is to be re-auctioned. A reconnaissance permit or prospecting licence may be granted for three years, and the latter may be extended subject to a maximum period of five years.
The state or central government may terminate a lease or licence before its term on the following grounds:
No such order for premature termination can be made without giving the licence or leaseholder a reasonable opportunity of being heard.
A mining lease lapses if an entity fails to start mining operations within two years of the date of execution of the lease or discontinues mining for a period of two years unless the state government is satisfied with the reasons for such delay and in which case an extension not exceeding one year may be granted. There is no requirement for relinquishment of any portion of the mining rights to the government after a specified period.
Acquisition by domestic parties versus acquisition by foreign parties
Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?
Mineral concessions in India are granted to Indian nationals or entities incorporated in India only. However, foreign parties can invest up to 100 per cent in the equity of such companies through the automatic route under the Indian foreign direct investment policy.
Protection of mining rights
How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?
There are no special courts or tribunals to adjudicate mining rights. However, the 2015 Mines and Mineral (Development and Regulation) Amendment Act 2021 provides for the establishment of special courts to deal with cases of illegal mining. Further, the National Green Tribunal may also adjudicate disputes regarding environmental non-compliance in any mining activity. India has an independent judicial system that consists of the Supreme Court of India as the apex judicial body under which are the High Courts, subordinate courts as well as the various tribunals.
India is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) as well the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 (the Geneva Convention). If a party receives a binding award from a country that is a signatory to the New York Convention or the Geneva Convention and the award is made in a territory that has been notified as a convention country by India, the award would then be enforceable in India.
What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests or does the holder of the mineral tenure have priority over surface rights use?
A mining rights holder is required to obtain surface rights over the area or obtain the consent of the owner to start prospecting or mining operations.
In relation to government-owned land, the selected bidder is granted surface rights by the government authorities. During prospecting, the approval of the government authority, such as the deputy collector, needs to be taken to clear vegetation to construct drains or use any underground water. The rights holder is liable to pay surface rent and water cess for the surface area used for the purposes of mining operations. The mining leaseholder must prior to using any land for new surface operations give written notice to the government authority, which has a right to raise objections and restrict the rights holder’s use of the surface.
When private landowners grant prospecting licences or mining leases, they may grant surface rights to such third parties according to the terms of their agreement.
Further, the government exercising the power of eminent domain can acquire land for public purposes such as mining under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013. However, this is subject to consent requirements from the surface rights holders and such acquisitions can be opposed.
Participation of government and state agencies
Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?
Yes. The government and state agencies have a right to participate in mining projects and the public-sector companies have traditionally dominated the mining sector. All companies undertaking mining activity must be incorporated in India – there is no specific listing requirement.
Government expropriation of licences
Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?
While there is no formal ability for expropriation, the government has the right to prematurely terminate a prospecting licence or a mining lease on specific grounds.
Are any areas designated as protected areas within your jurisdiction and which are off-limits to mineral exploration or mining, or specially regulated?
Under the Indian Constitution, the Indian President may notify certain lands as ‘scheduled areas’ that have a special governance mechanism. Scheduled areas are tribal-dominated areas that are underdeveloped and show marked economic disparity. Laws formulated in relation to scheduled areas typically have more restrictions on land acquisitions and transfers. Further, the central or state government may also reserve certain areas (that are not already held under lease or licence) with a view to conserving any mineral. Any mining activity in such reserved areas is only done by government companies.
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