Press Trust of India
New Delhi, Jan 11: The government Monday said it will take views from the public, states and industry on amending the MMDR Act to include provisions allowing transfer of captive mines granted through procedures other than auction. The step will not only spur merger and acquisitions (M&A) in the sector, but will also help in checking the stressed and non-performing assets of banks by allowing them to liquidate assets where a firm or its captive mining lease is mortgaged.
The MMDR Act, passed by Parliament in March last year, only allows transfer of mining leases in cases where the mine has been acquired through auction. The ministry has prepared the draft Mines and Minerals (Development and Regulation) (Amendment) Bill, 2016 seeking to amend the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957, the Mines Ministry said in a release Monday.
Through this, the government wants to insert: “Provided that where a mining lease has been granted otherwise than through auction and where minerals from such mining lease is being used for captive purpose, such mining lease will be permitted to be transferred subject to compliance with terms and conditions as prescribed by Central government.” The move will allow M&As worth billions of dollars in the domestic market, especially in the cement sector where several such deals are stuck like those of Jaiprakash Associates and Lafarge, industry insiders said. As part of the consultations, the government has invited suggestions from public, state governments, mining industry and entities concerned, on the draft Bill. The last date for sending comments and suggestions is January 26, 2016, the statement said.
The transfer of captive mining leases, granted otherwise than through auction, would facilitate banks and financial institutions to liquidate stressed assets where a company or its captive mining lease is mortgaged,” it added. Besides, it will also allow M&As and facilitate in ease of doing business for companies to improve profitability and decrease costs of the companies dependent on supply of mineral ore from captive leases, it said. “The transfer of captive leases would be subject to the consideration of enforcing Performance Security, Mine Development and Production Agreement (MDPA) and realisation of an appropriate amount, if any, if found feasible at the time of framing terms and conditions,” it said.
