Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023

• 05 Aug 2023

For Prelims: Offshore Mining Sector, MMDR (Mines and Minerals Development and Regulation) Act, Exclusive Economic Zone.

For Mains: Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023

Source: PIB

Why in News?

The Rajya Sabha recently passed the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023, aiming to introduce crucial reforms in India's offshore mining sector.

• This amendment seeks to modify the existing Offshore Areas Mineral (Development and Regulation) Act, 2002, to enable the auction as the method of allocating operating rights in offshore areas.

What are the Key Features of the Amendment Bill?

• Introduction of Auction Regime:
  • Two types of operating rights, production lease, and composite licence, to be granted through auction by competitive bidding exclusively to the private sector.
  • Operating rights to be granted to PSUs in the mineral bearing areas reserved by the Central Government. PSUs will be exclusively granted operating rights for atomic minerals.
    • Atomic minerals include mainly minerals containing uranium, thorium, rare metals, viz. niobium, tantalum, lithium, beryllium, titanium, zirconium, and Rare Earth Elements (REEs) as well as beach sand minerals.
• Fixed Period for Production Lease:
  • The provision for renewal of production leases has been removed.
  • The production lease period is set at 50 years, aligning with the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) .
• Area Acquisition Limit:
  • A limit has been imposed on the total area one entity can acquire offshore.
  • The maximum acquisition area is restricted to 45 minutes latitude by 45 minutes longitude for any mineral or prescribed group of associated minerals under one or more operating rights.
• Non-lapsable Offshore Areas Mineral Trust:
  • To ensure funds for exploration, disaster relief, research, and benefits to affected parties, a non-lapsable Offshore Areas Mineral Trust will be established.
  • The trust will be funded by an additional levy on mineral production, not exceeding one third of the royalty, with the exact rate prescribed by the Central Government.
• Ease of Business and Timelines:
  • Provisions for easy transfer of composite licence or production lease.
  • Timelines for commencement of production and dispatch after execution of production lease to ensure timely start of production.
• Revenues:
  • Royalty, auction premium, and other revenues from mineral production in offshore areas will accrue to the Government of India.

What is the Need for Such an Amendment Bill?

• Lack of Activity in Offshore Areas:
  • Despite the enactment of the Offshore Areas Mineral (Development and Regulation) Act, 2002, there has been no mining activity in offshore areas.
  • This indicates a lack of interest or effective utilization of the vast maritime resources available to India.
  • The Amendment Bill seeks to address the underlying issues and incentivize exploration and mining in these offshore areas.
• Discretion and Lack of Transparency:
  • The current Act suffers from the problem of discretion and lacks transparency in the allocation of operating rights for mining in offshore areas.
  • The Amendment Bill aims to introduce a transparent auction mechanism to allocate operating rights, inspired by the successful amendments to the MMDR Act for onshore areas.
• Harnessing Maritime Resources:
  • India holds a unique Maritime Position, with an Exclusive Economic Zone (EEZ) covering over two million square kilometers, rich in recoverable resources. Geological Survey of India (GSI) estimates significant reserves of lime mud, construction-grade sand, heavy mineral placers, phosphorite, and polymetallic ferromanganese nodules and crusts in various offshore areas.
  • However, the potential of these resources remains largely untapped. The Amendment Bill seeks to harness the full potential of these maritime resources to support India's high-growth economy by promoting exploration and mining through the participation of both the public and private sectors.

Conclusion

• By introducing auction as the method of allocation of operating rights, the Bill aims to promote transparency, attract private sector participation, and optimize India's maritime resources to support its economic growth ambitions.
• This reform aligns with India's vision to harness its vast maritime resources while ensuring sustainable and responsible mining practices.