• How-to

Minerals find ubiquitous use in every field, from retail to electronics and open the door to myriad opportunities. The recent environmental violations fiasco of some mining majors notwithstanding, the sector is attractive as long as one exercises caution and avoids shortcuts to success.

There are three mineral concessions related to mining: Reconnaissance Permit (RP), Prospecting License (PL) and Mining Lease (ML). The first two are for preliminary exploratory purposes and the latter is the lease for actual extraction of minerals. Though holding an RP gives preferential rights while applying for ML and similarly a PL for ML, it’s not a prerequisite to apply for PL or ML.

India is home to around 86 minerals, among them four fuels, 10 metallic, 46 non-metallic, three atomic and 23 minor minerals. Mineral concessions are granted in India by the respective state governments, except for some minerals which require approval from the central government in addition. By and large, the procedure remains the same for all three concessions.

Any Indian national is eligible to apply for the mineral concessions. In case of a foreign company, the only condition is that the company should be registered in India. There is no ceiling on the extent of foreign holding in the company. Bringing in foreign equity is allowed for non-atomic, non-fuel minerals after informing the RBI.

One important aspect to be considered is the area. You can apply for concession on areas notified by the government. You can carry out mining operations on land that is not under government control, say, a forest land or farmland. If you understand the rules and follow them, the process is not that complex.

In the above cases, the land has to be acquired before you apply for RP, PL or ML. This also calls for a clearance from the environment ministry and a forest clearance as well as responsibilities of relocation and rehabilitation of the displaced. That is the difficult part of obtaining license.

In the simple case of applying for notified areas, the land acquisition can be skipped. In all three concessions, the application procedure can be summarized thus:

1. Locate the area
2. Get Environmental Clearance (EC) or Forest Clearance (FC) if required.
3. Submit the respective Mining Concession Rules form along with EC/FC/Tenancy agreement if applicable, Topography of the area obtained from the Office of Survey of India and respective security deposit.

The status can be tracked real time on the ministry’s website. Once a concession is granted, the respective Mineral Conservation & Development Rules form has to be submitted with details of operations. A yearly report should be submitted reporting progress.

Expenses
Apart from the security deposit, royalty and dead rent are also to be paid as notified from time to time by the government. But the royalty and dead rent, once fixed, stand unaffected by any further increase for three years. As for the expense of time, the decision is officially to be announced within six months for an RP, nine months for a PL and 12 months for an ML.

Getting to the specifics
The tenure and area for which concession is granted varies with the type. Here are parameters specific to each of the three concessions:

Holding an RP or PL gives preferential rights while applying for PL or ML respectively. For non-notified areas, the concession is granted on a first-come-first-serve basis.

In the case of areas notified by the government inviting applications, all applications received within a specified period (usually over 30 days) will be treated at par. The concessions are granted at the discretion of the state government.

Note that surface ownership of land does not grant any preferential right for mining concessions. If following the applications for a previously non-notified area the government, for some reason, decides to notify while the previous applications are not yet disposed of, then the previous applicants will also be evaluated together with the new applicants and they stand to lose the first-in-time advantage.

For renewal of mining lease, you should apply for renewal 12 months prior to date of expiry of existing lease. A mining lease lapses if no mining operation takes place two years after execution of ML or if operation stops for more than two years in middle of lease term. After applying for renewal, if there is a delay in granting renewal by the government, you can continue to mine beyond the expiry date.
©Entrepreneur January 2011

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How-to, mining license