Transfer of Mining Leases in India

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11042020

 


Transfer of a mining lease is tedious work in India. It is not controlled by Companies Act.  The mining leases to individual, company, firm are granted by state governments under the guidelines prescribed in the Mines and Minerals (Development and Regulation) Amendment Act,2015, the Mineral Auction Rules,2015 and the Minerals (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules,2016. Prior to these acts and rules, the mining leases were granted through the Mines and Mineral (Development and Regulation) Act, 1957 and the Mineral Concession Rules,1960. During the act of 1957 the mining leases were granted on "First Come – First Serve" basis but after the enactment of MMDR Amendment Act-2015 all mining leases are granted by electronic auction process only. However, there are several mining leases ( which were granted through MMDR, 1957) have been terminated on 31.03.2020 these mining leases are non-captive mining leases i.e commercial mines, while some mining leases which are for captive use i.e mineral used in dedicated end use plant, will be terminating on 31st March, 2030 and will be available for grant through auction process.  Many such mining lease holders losing their interest in running the mines for remaining years wants to sale their lease which is possible through transfer route only, because as per the law the mining leases cannot be sold, assigned.  Though, the mining leases cannot be sold, but they can be transferred. At present, there are two type of mining leases which are available for transfer i.e 

  • Granted prior to the MMDR Amendment Act,2015 and terminating on 31st March, 2030 and 
  • Granted after the MMDR Amendment Act, 2015 granted for 50 years. 

The method of transfer of these two type of leases is different.   

I.   Mining Leases for Non Auctioned captive mines:

The mining leases granted through Non- Auction route can be transferred under Rule 5 of Minerals (Transfer of mining lease granted otherwise than through Auction for captive Purpose) Rules,2016 which states: 

A. Transfer shall be permitted when entire quantity of mineral extracted from mining lease  is being used in manufacturing unit owned by the lessee ( i.e mining lease holder)

B. Holder of ML shall apply to state government for transfer of mining lease in the prescribed form. (This form is given in schedule – I of Minerals (Transfer of mining lease granted otherwise than through Auction for captive Purpose) Rules, 2016).

C.  The state government within 90 days approve or reject the proposal

D. The state government within 15 days of approval of application for transfer of mining lease, based upon an estimation of value of estimated resources of mining lease ( Refer Mineral Auction Rule,2015),raise demand upon transferee ( i.e a person to whom mining lease is to be transferred) for making upfront payment of an amount equal to the 0.50 percent of the value of mineral resources.

E. The upfront payment should be made lump sum within 30 days from the date of receipt of demand letter. 

F. The Transferee shall within 15 days of making payment of upfront amount sign  MDPA ( i.e Mine Development and Production Agreement).

G. The Transferee within 15 days of signing MDPA shall provide performance security in the form of bank guarantee an amount equal to 0.50 percent of value of mineral resources.

H.The performance security shall be submitted every five year so that it remain 0.50 percent of the residual resources.

I. The transferor and transferee shall jointly submit duly registered deed to government  in the prescribed form.

J.   Transfer Charges:

i.   The transferee shall make payment of transfer charges an amount equal to 80 percent of Royalty (Royalty Rs 80 per ton)

ii.  The transferee shall make payment of dead rent ( not applicable for running mines)

iii. The transferee shall contribute to the National Mineral Exploration Trust ( 2 percent of  Royalty)

iv. The transferee shall make contribution to the District Mineral Foundation 30 percent of Royalty.

II.  Mining Leases through Auction:

The mining leases granted through auction process can be transferred by Rule 23, Chapter-VIII of  Minerals (Other  than Atomic and Hydrocarbons Energy Minerals) Concession Rules,2016 which states:

A holder of mining lease can transfer mining lease to a person eligible to hold mining lease i.e fulfilling Net worth criteria, he is Indian National and other criteria as mentioned in the Tender Document of that mining lease. Following procedure is adopted

i)  Transferor and Transferee should jointly submit an application in prescribed form with details of consideration payable by transferee for the transferor

ii)  The state government within 90 days approve or reject the proposal.

iii) All conditions and liabilities imposed upon transferor should be transferred to transferee.

iv) The transfer deed to be registered without which the transfer will be ineligible.

v) Payments: Bid amount which is an amount offered during bid process to become successful bidder, (refer Mineral Auction Rule, 2015), Royalty ( Rs 80 per ton), District Mineral Foundation Fund (DMF) ( 10 percent of Royalty), Contribution to Nation Mineral Exploration Trust (2 percent of Royalty)

 

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Comments

Satyanjay kumar chaturvedi said…
Nice and useful information for transfer the lease.
April 11, 2020 at 4:29 PM
Unknown said…
A good brief note on transfer of Mining Leases.
April 12, 2020 at 1:18 PM
Unknown said…
Nice, i agree on the transfer of lease in india laws laid down 2015,a huge amount is required in transfer of lease at various levels, big serious player shall come for the same, no chances for small players. thanks, Anoop Kumar Saxena, DGM, mining corp. Bhopal.
April 19, 2020 at 11:58 AM
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