India Aims to Secure Critical Mineral Supply with Revised Mining Laws
India is taking significant steps to enhance its supply of critical minerals, including lithium, copper, cobalt, and rare earth elements, which are essential for various sectors such as nuclear energy, renewable energy, and advanced electronics. The government plans to introduce amendments to mining laws in Parliament this week, aiming to facilitate state funding for acquiring critical mineral assets abroad. This initiative comes as India seeks to reduce its reliance on China, which currently dominates the supply chain for these vital resources.
Amendments to Mining Laws
The Indian government is poised to present amendments to the Mines and Minerals (Development and Regulation) Act in Parliament, with expectations that the Bill could be introduced as early as Monday. A senior official confirmed that all necessary internal approvals have been secured. The proposed amendments focus on enabling state funding for the acquisition of critical mineral assets located overseas. The administration plans to utilize funds from the National Mineral Exploration Trust (NMET), which currently holds over ₹6,000 crore, sourced from mining lease holders contributing 2% of their applicable royalty to the trust. This financial backing is crucial for India’s strategy to bolster its mineral supply chain.
Established in 2015, the NMET has approved projects worth ₹4,000 crore to accelerate mineral exploration in India. The proposed changes will allow the trust’s funds to be used not only for domestic exploration but also for acquiring overseas assets. The trust’s name will be updated to reflect its expanded mandate, which now includes the development of critical mineral assets internationally.
Strengthening Supply Chains
Recent reports indicate that the government is also working on amendments to strengthen the supply chains for critical minerals. The last modification to the MMDR Act occurred in 2023, and the upcoming changes aim to address the pressing issue of raw material availability for critical minerals. One of the key proposals includes allowing the sale of mineral stockpiles from captive mines through one-time payments. Many captive mines have accumulated large quantities of low-grade minerals that are unsuitable for their operations, and current regulations prevent them from selling these deposits.
State authorities have noted that over 50% of extracted minerals are often deemed unsuitable for their intended use. The proposed regulatory changes would enable states to authorize the sale of these stockpiles within leased areas, contingent upon the payment of supplementary fees. This move is expected to optimize resource utilization and enhance the overall efficiency of mineral management in the country.
Expanding Mining Leases
In addition to the sale of stockpiles, the government aims to streamline regulations for incorporating newly identified minerals and adjacent areas into existing mining leases. This initiative would allow holders of deep-seated mineral resource leases to request permission to include neighboring areas, limited to a single application and restricted to 10% of the existing leased space. The extraction of minerals from these additional areas would incur a 10% surcharge above the auction premium for auctioned mines, while royalty rates for non-auctioned mines would be doubled.
These regulatory changes are part of a broader strategy to enhance India’s mineral production capabilities. Official data indicates that India’s mineral production, excluding atomic, minor, and hydrocarbon energy minerals, reached ₹1.40 lakh crore in the fiscal year 2023-24, up from ₹1.24 lakh crore the previous year. This growth underscores the government’s commitment to strengthening the domestic mineral sector and ensuring a stable supply of critical resources for various industries.
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