




































Ecology, Economy and Society–the INSEE Journal 3 (1): 111–114, January 2020 

 
CONVERSATIONS: National Mineral Policy 2019 — balancing 
stakeholder interests and concerns 
 

National Mineral Policy 2019: a Remedy as Bad as the 
Disease? 
 

S. Vijay Kumar  
 
1. INTRODUCTION 

The mineral sector is regulated through the Mines and Minerals 
(Development and Regulation) Act 1957 (MMDR Act) enacted by 
Parliament, and the rules thereunder and the changes in the law (and rules) 
and the policy have generally been going in step. The MMDR Act was 
amended in 2015, primarily to make auction the sole mode of granting 
mineral concessions (i.e. prospecting licences and mining leases). Some 
consequential changes were also made in the rules: the National Mineral 
Policy (NMP) of 2019 is thus primarily a revision of NMP of 2008. One of 
the important consequences of the change in the law (and now in the policy 
as well) is that, despite some phrases in the policy to the contrary, the 
private sector no longer has an incentive to do exploration to locate 
minerals at their own risk and cost, since that will not enable them to claim 
mining rights, as these rights will be auctioned to the highest qualifying 
bidder (Kumar 2019).  

Two other major changes in NMP 2019 compared to the 2008 policy need 
to be noticed. One aspect is the linking of NMP 2019 with the vision of 
“Make in India” (GoI 2018) announced by the Prime Minister in 2014 and 
amended subsequently, which includes the mining sector.1 The second is 
the introduction of a concept of “inter-generational equity” based on 

                                                           
 The Energy and Resources Institute (TERI), India Habitat Centre, Lodhi Road, New Delhi 
-110003; SVijay.kumar@teri.res.in. 

Copyright © Kumar 2020. Released under Creative Commons Attribution-NonCommercial 
4.0 International licence (CC BY-NC 4.0) by the author.  

Published by Indian Society for Ecological Economics (INSEE), c/o Institute of Economic 
Growth, University Enclave, North Campus, Delhi 110007.  

ISSN: 2581-6152 (print); 2581-6101 (web). 

DOI: https://doi.org/10.37773/ees.v3i1.94  

1 The “Make in India” initiative is intended to give a boost to entrepreneurship in India in 25 
identified sectors in manufacturing, infrastructure and services. 

https://doi.org/10.37773/ees.v3i1.94


Ecology, Economy and Society–the INSEE Journal [112] 

aspects like available reserves/resources. In this context, the perspective of 
Basu (this issue) that mineral extraction needs to be accounted for as the 
sale of inherited wealth is an interesting view. 

 

2. STAKEHOLDERS AND THEIR INTERESTS 

The key stakeholders of NMP 2019 are: the states; the central government; 
local communities adversely affected by mining-related activities; NGOs in 
support of local communities or environmental issues; the mining industry 
in general; other upstream and downstream industries; and citizens 
(including future generations) concerned with the quality of life. 

The following main conclusions may be drawn: 

 Auctions: The Central Government supports auctions because it 
purports to bring in “transparency” and reduce “discretion”. The 
mineral-rich states, too, support auctions, since it potentially 
increases their revenues. The mining industry, in general, is not in 
favour of the auctions as it increases their costs, creates an 
impression of the scarcity, and interferes with market forces; 
however, the larger players in the metal-making industry with deep 
pockets find auctions a good way of increasing their raw material 
security. Local communities may currently see no difference between 
the mining based on the earlier system and the mining based on the 
auctions; but the reality is that the auctions will transfer the 
substantial surplus to the states leaving that much less to be 
potentially invested (by way of Corporate Social Responsibility, etc.) 
in local communities. While the general view is that through the 
auctions route the mining companies will no longer be able to make 
windfall profits, NGOs working with local communities may prefer a 
larger share of the revenues being invested locally rather than being 
deposited in a state treasury. Exploration agencies (upstream industry 
consisting of domestic companies like Geomysore and Indo-Gold 
and Indian arms of foreign companies like Rio Tinto, Anglo-
American etc.) are, as mentioned, the most severely impacted. 

 Make in India: Downstream industry (process R&D, metal making 
and manufacturing) is likely to be adversely impacted, in the long 
run, by the higher prices of mineral ore consequent to the auction 
process. In the long term, because of disincentive to conduct 
exploration, many metals (including technology metals, energy-
critical metals, platinum group of metals, etc.) used in new 
technologies will remain undiscovered. This will increase the already 



[113] S. Vijay Kumar 

high import dependence of domestic industry and may affect the 
competitiveness of Indian manufacturing. 

 Intergenerational equity: The 2019 policy seeks to address inter-
generational equity in the obvious way – by apportioning known 
resources in a conservative manner over time. Jain (this issue) has 
mentioned about attracting investments and ensuring the welfare of 
the communities. Those opposed to mining per se as an unsustainable 
activity will clearly prefer the approach of NMP 2019. Unless 
exploration is incentivised, and the resource-cum-reserve base is 
continuously augmented through new discoveries of minerals, the 
policy will adversely impact the mining industry as well as the 
downstream industry to the extent that recycling cannot meet the 
need. As mentioned by Ranjan (this issue) trade-offs arising from 
increasing mining activities need to be considered carefully.  

 

3. BALANCING ACT(S) 

Clearly, the challenge is to reconcile the concept of auctions as the “non-
discretionary” way of granting mining leases with incentives for mineral 
exploration. In other words, some way must be found to reward a 
successful exploration effort. Currently, the alternative idea on the table is 
to apply the auction process only to the “bulk” minerals like iron ore, 
bauxite and limestone, where the exploration is a relatively simple process 
and risk is low since these minerals occur over large areas and close to the 
earth’s surface. In such cases, the exploration agencies can be paid for their 
work from public funds. In respect of the remaining minerals, which are 
likely to be found at depths and where the risk to successful location is 
high, expenditure from public funds can be difficult to be justified. In such 
cases, assurance of the mining lease rights in line with international practice 
is the only way of incentivizing exploration (Kumar 2019). This may require 
the Central Government to acknowledge that auction need not be the only 
mode of disposal of natural resources. Legally there is no difficulty because 
unlike the common public perception, the Supreme Court in its opinion 
dated September 27, 2012, on the reference by the President of India, 
actually stated that (Special Reference No.1 of 2012 under Article 143(1) of 
the Constitution of India) auction is not the only way of discharging a 
public trust while alienating natural resources.2  

                                                           
2 See Kumar and Ganeshan (2017) on why the Supreme Court was right when it said that the 
submission that “[…] disposal of a natural resource for commercial use must be for revenue 



Ecology, Economy and Society–the INSEE Journal [114] 

Another alternative is to turn the clock back to the pre-2015 position and 

return to a situation where exploration is incentivized through the grant of 
mining lease rights, but where prospecting (and mining) concessions may be 
discretionary based on MoUs with industry, or an effort to promote the 
public sector. Some strengthening of the process can be envisioned which 
will reduce the scope of “arbitrary discretion”. However, given the recent 
history of the 2G spectrum and coal licence cases, it will be very hard to 
justify such a framework which will give the impression in the public mind 
of windfall profits and crony-capitalism. 

 

REFERENCES 

GoI. 2018. “Public Procurement (Preference to Make in India), Order 2017 – 
Revision.” Public Procurement Division, Department of Industrial Policy and 
Promotion, Ministry of Commerce and Industry. New Delhi: Govt. of India. 
Accessed on December 10, 2019. 
https://dipp.gov.in/sites/default/files/publicProcurement_MakeinIndia_31May20
18.pdf  

Kumar, S. Vijay and Swati Ganeshan. 2017. “Why We Need a New Mineral 
Exploration Policy for National Mineral Security.” Discussion Paper. New Delhi: 
The Energy and Resources Institute. Accessed on December 10, 2019. 
https://www.teriin.org/sites/default/files/2018-05/NMEP_discussion-
paper_june18.pdf  

Kumar, S. Vijay. 2019. “Exploration and Mining in India: Time for a Deeper 
Look.” Discussion Paper. New Delhi: The Energy and Resources Institute. 
Accessed on December 10, 2019. https://www.teriin.org/sites/default/files/2019-
09/exploration-mining-india.pdf  

 

                                                                                                                                  
maximization, and thus by auction, is based neither on law nor on logic…. besides legal 
logic, mandatory auction may be contrary to economic logic as well.” 

https://dipp.gov.in/sites/default/files/publicProcurement_MakeinIndia_31May2018.pdf
https://dipp.gov.in/sites/default/files/publicProcurement_MakeinIndia_31May2018.pdf
https://www.teriin.org/sites/default/files/2018-05/NMEP_discussion-paper_june18.pdf
https://www.teriin.org/sites/default/files/2018-05/NMEP_discussion-paper_june18.pdf
https://www.teriin.org/sites/default/files/2019-09/exploration-mining-india.pdf
https://www.teriin.org/sites/default/files/2019-09/exploration-mining-india.pdf

