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India’s new legislation governing mines and minerals that would replace 54-year old laws for the sector was increasingly getting mired in opposition from within the government itself.

Close on the heels of objections raised by the Corporate Affairs Ministry, India’s Steel Ministry has formally submitted its reservations on provisions in the Mines and Minerals Development and Regulation (MMDR) Bill, that makes auction mandatory for the granting of mineral concessions even for government-controlled and -owned mining and metal-producing companies.

The Steel Ministry, in a submission before the Parliamentary standing committee which was currently scrutinising the Bill, said that reservation of mining concessions for government companies could not be scrapped as proposed in the Bill and neither should government companies be forced to participate in competitive bids for mineral resources since these companies had to bear additional social costs.

The Steel Ministry also expressed apprehensions concerning companies under its control like Steel Authority of India, or even pure mining companies like the country’s largest iron-ore miner NMDC Limited, both of which were government owned, that would have to take the auction route once leases granted for existing mines allocated to them were up for renewal.

Under the provisions of the MMDR Bill, governments of Indian provinces would invite competitive bids for the granting of prospecting licences and mining leases where the value of reserves had been established. However, for preliminary stage reconnaissance licences and large area prospecting licences, a first-come, first-served method would be adopted.

The Parliamentary standing committee, which was in the final stages of public hearings on the Bill, would finalise its report shortly since the Bill was scheduled for Parliamentary approval during the Budget session commencing next week.

The Steel Ministry has also expressed reservations over the decentralisation of powers envisioned in the Bill, which included transferring all rights to grant concessions to the provincial governments.

Under the existing dispensation, in the case of mining concessions for strategic minerals like iron-ore, chromite, limestone and uranium, the Indian government’s approvals were mandatory. According to the Ministry, mining and metal companies were apprehensive about dealing with provincial governments particularly in cases where mineral reserves extended across provincial borders, compelling them to deal with more than one government.

Last week, the Corporate Affairs Ministry raised opposition to the Bill's exclusion of limited liability partnerships from mining concession eligibility and the issue of nontransferable equity shares of project-affected families on the grounds of inconsistency with the Companies Act.