SYLLABUS
GS-1: Distribution of key natural resources across the world (including South Asia and the Indian subcontinent).
GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources.
Context: The Ministry of Mines has notified the Minerals (Other than Atomic and Hydro Carbon Energy Minerals) Concession (Second Amendment) Rules, 2026, to operationalise provisions related to mining lease expansion and inclusion of additional minerals.
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- The rules are framed pursuant to amendments in the Mines and Minerals (Development and Regulation) Act, 1957 through the MMDR Amendment Act, 2025 (effective September 2025).
- The amendment aims to boost exploration, production, and efficient utilisation of critical, strategic, and deep-seated minerals.
- It aligns with the objective of Atmanirbhar Bharat by strengthening domestic mineral supply chains.
- The rules provide the operational framework for implementing key legislative changes introduced in 2025.
Key Provisions of the Amendment
- Inclusion of Contiguous Areas: A one-time extension is allowed for Mining Lease (ML) and Composite Licence (CL) holders of deep-seated minerals for inclusion of contiguous areas.
- The limit is up to 10% of the existing area for ML and up to 30% for CL, with payment fixed at 10% of the auction premium for auctioned leases and additional royalty equivalent for non-auctioned leases.
- Optimal Extraction of Deep-Seated Minerals: The amendment enables mining of minerals locked in adjoining areas. It also prevents uneconomic fragmentation of mining operations.
- Inclusion of Associated Minerals: The amendment allows inclusion of additional minerals, including minor minerals, in existing leases.
- State Governments must approve such inclusion within 30 days, and no extra payment is required for critical minerals, strategic minerals, and deep-seated minerals listed in the Seventh Schedule.
- Provisions for Minor and Major Minerals: For minor mineral leases granted before 2025, a mechanism is provided to include major minerals.
- For future leases, exploration up to G3 level is mandatory (except sand), and if major minerals are discovered, the area will be auctioned as a major mineral block.
- Removal of Restrictions on Captive Mines: The cap on the sale of minerals from captive mines has been removed.
- If the plant operates at full capacity, surplus sale is allowed, whereas if it operates below capacity, sale is limited to the quantity consumed annually.
- Time-bound and Simplified Procedures: The amendment introduces a simple and time-bound application process. This is aimed at enhancing ease of doing business in the mining sector.
MMDR Amendment Act, 2025
- Expansion of NMET (now NMEDT): The National Mineral Exploration Trust has been expanded and renamed as the National Mineral Exploration and Development Trust (NMEDT), allowing fund utilisation within India (including offshore areas) and abroad, with lessee contribution increased from 2% to 3% of royalty.
- Inclusion of New and Associated Minerals: The amendment enables the inclusion of new and associated minerals in existing leases, including permitting major minerals in minor mineral leases under conditions, with an additional payment mechanism introduced while exempting critical and strategic minerals to boost their production.
- One-time Extension for Contiguous Areas: State Governments can grant a one-time extension of mining leases or composite licence areas to include adjacent contiguous regions on payment, capped at 10% for mining leases and 30% for composite licences to support efficient extraction.
- Promotion of Mineral Markets and Exchanges: The Central Government is empowered to promote mineral markets and establish exchanges for trading minerals and their processed forms to ensure transparent price discovery and better market stability.
- Liberalisation of Sale from Captive Mines: Captive mine owners are now allowed to sell minerals after meeting their own requirements and paying additional charges, including sale of unused accumulated dumps to improve resource utilisation and increase state revenue.
- Removal of Prior Approval for Auction: The requirement of prior Central Government approval for auction of certain notified mineral blocks for composite licences has been removed to streamline and speed up the auction process.
Significance
- Economic & Industrial Impact: The amendment boosts the supply of critical and strategic minerals, thereby enhancing domestic mineral production and reducing import dependence.
- It strengthens industrial growth, supports MSMEs through improved mineral availability, and contributes to the vision of Atmanirbhar Bharat.
- Ease of Doing Business: It introduces simpler and time-bound procedures, which help reduce regulatory delays and improve the overall business environment in the mining sector.
- Optimal Resource Utilisation: The amendment promotes scientific mining and efficient extraction of deep-seated minerals. It also helps avoid fragmentation of mineral resources by enabling integrated, optimal mining operations.
- Benefits to States: States gain higher revenue through additional payments and increased mineral production. The clear role assigned to State Governments also strengthens cooperative federalism.