Coal ministry proposes longer lease, removal of sale cap in push for mining law overhaul

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The ministry of coal has proposed amendments to the mining law aimed at modernising the sector by extending lease tenures to 50 years, easing sale restrictions and recognising coal gasification as a permitted activity among others.

The ministry has sought comments on five proposed amendments to the Mines and Minerals (Development and Regulation) Act, 1957, which aims to align the coal sector with current mining practices, improve investment certainty and ensure better use of resources.

The ministry wants extend coal and lignite mining lease tenures from 30 years to 50 years.

“This has been proposed because the existing system of mid-term renewals creates regulatory uncertainty, increases compliance requirements and makes long-term mine planning difficult, particularly for projects where the mine life extends beyond 30 years,” an official privy to the matter said.

The ministry also wants the 50 percent sale cap on coal produced from captive mines to be relaxed.

The end-use mandates leave large volumes of coal extracted from captive mines unused, creating “legacy dumps”, which pose environmental and safety risks.

To address the issue of surplus coal, the ministry wants “greater sale” of this coal in the open market on the lines of similar provisions for non-coal minerals.

It also wants coal gasification included in the definition of mining operations under the MMDR Act. This would allow conversion of coal and lignite into syngas or synthetic gas (a fuel gas made by converting coal into a mixture of hydrogen and carbon monoxide) for use in power generation, chemicals, and fertilisers.

Regulatory clarity is needed to encourage adoption of gasification technologies, particularly for underground and deep-seated reserves, and to support cleaner utilisation of domestic coal.

A review of area ceilings prescribed for licences and mining leases has also been proposed.

These area ceilings— fixed decades ago when mining was largely manual and fragmented — do not reflect the scale of modern mechanised mining, where larger, contiguous areas are required for efficient planning, deployment of equipment and optimal extraction.

Revising these limits will allow operators to develop mines more efficiently and reduce fragmentation of mineral blocks, a second ministry official said.

The ministry also proposes to strengthen legal and enforcement mechanisms to curb illegal mining.

"The ministry has proposed reviewing the statutory powers available to coal company officials and security personnel to take action against illegal extraction, transportation and storage of coal, amid concerns that existing provisions are inadequate to deter unauthorised mining activity," the ministry said.

The ministry has invited comments from states, industry and other stakeholders by January 11, signalling that the proposals are intended to form the basis of an amendment bill to make changes to the MMDR Act.