On August 3rd, 2023, The Rajya Sabha passed the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023. the bill seeks to make amendments to the Offshore Areas Mineral (Development and Regulation) Act, 2002 (‘OAMDR Act’).
- The act will introduce a major reform by introducing auction as the method of allocation of operating rights in offshore areas.
- The OAMDR Act, of 2002 was introduced in 2010. However, no mining activity has been undertaken in the offshore areas to date. Hence, the Central Government proposed the present Amendment Bill to bring several reforms in the offshore mining sector.
Salient features of the Amendment Bill
- Two types of operating rights to be granted under the Act to private sector only through auction by competitive bidding, viz. production lease and composite licence.
- Composite licence introduced in the Act is a two stage operating right granted for the purpose of undertaking exploration followed by production operation.
- Operating rights to be granted to PSUs in the mineral bearing areas reserved by the Central Government.
- Provision has been made for grant of operating rights only to PSUs in case of atomic minerals.
- Provision for renewal of production leases has been removed and its period is fixed as 50 years on lines similar to the MMDR Act.
- Limit has been introduced on total area one person can acquire in the offshore. Now, a person cannot acquire more than 45 minutes latitude by 45 minutes longitude in respect of any mineral or prescribed group of associated minerals under one or more operating rights (taken together).
- To ensure availability of funds for exploration, mitigation of adverse impact of offshore mining, disaster relief, research, interest and benefit of the persons affected by exploration or production operations, etc., a provision has been made for setting up of a non-lapsable Offshore Areas Mineral Trust which will maintain a fund under the Public Account of India. This will be funded by an additional levy on the production of minerals, not exceeding one third of the royalty. The exact rate of additional levy will be prescribed by the Central Government.
- To promote ease of doing business, a provision has been made for easy transfer of composite licence or production lease.
- To ensure timely start of production from the leases, the bill introduces the timelines for commencement of production and dispatch after the execution of production lease.
- Royalty, auction premium and other revenues from the production of minerals from offshore areas shall accrue to the Government of India.