INDIA Law and Practice Contributed by: Vishnu Sudarsan, Kartikeya Gajjala and Mehar Vasant, J Sagar Associates
cially viable, socially responsible and environ - mentally, technically and scientifically sound, with a long-term view of development, and that uses mineral resources optimally and ensures sustainable post-closure land uses. To this end, the NMP envisages: • that environmental, economic and social con - siderations must be considered early in the decision-making process, to ensure sustain - able development in the mining sector; • that the central government shall set a bench - mark for evaluating the sustainability of min - ing operations, and enforce commitments to adopt sustainable development practices for achieving environmental and social goals; and • an inter-ministerial body to institutionalise a mechanism for ensuring sustainable mining with adequate concerns for environment and socio-economic issues in mining areas, and also to decide the limits of the extent of min - ing activities, having regard to the principles of sustainable development and intergenera - tional equity. 3.4 Energy-Transition Minerals The MMDR Act was amended in 2023 so that energy-transition minerals such as lithium, cobalt and nickel are now classified as “Criti - cal and Strategic Minerals”. Notably, lithium had earlier been classified as an atomic mineral, with minerals concessions in this respect being restricted to the public sector. Pursuant to this amendment, the central government alone is empowered to conduct auctions to grant min - eral concessions for such minerals to any per - son who is otherwise eligible to receive a mineral concession under the terms of the MMDR Act. Upon successful completion of the auction, the central government intimates the details of the winning bidder to the state government, which then grants a mineral concession to such bidder.
All royalties in respect of minerals won under the concession accrue to the state government. Notably, the amendment has also introduced the concept of an “exploration licence”, which is to be granted by state governments in respect of certain identified minerals (which include lithi - um, cobalt and nickel). These licences are for the purpose of undertaking reconnaissance or prospecting operations, or both. The exploration licence is granted for a period of five years, with an option to extend by a period of two years. To the extent that a mining lease is granted in respect of the area so explored, the licensee is entitled to a prescribed share of the auction-dis - covered amounts payable by the mining lessee to the state government. The auction for grant of the mining lease is required to be complet - ed within one year of the exploration licensee having submitted their geological report in the manner prescribed. If a winning bidder is not selected within such period, the state govern - ment shall pay the exploration licensee a pre - scribed amount. In addition, in a bid to encourage private par - ticipation in exploration activities, particularly for critical minerals, the government of India has launched schemes for the partial reimbursement of exploration expenses, whereby up to 50% of the exploration expenditure incurred by the licence holder is reimbursed. These amendments and initiatives are aimed at increasing the exploration and mining of critical minerals that are vital to ushering in the green transition and increased sustainability (includ - ing helping India achieve net-zero emissions by 2070), and essential for economic development and national security (the unavailability of which minerals may lead to supply chain vulnerabilities and even disruption of supplies). The proposed
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