The Rajya Sabha has approved an enabling legislation to make it easier for mergers and acquisitions (M&A) of steel and cement companies reeling in the aftermath of the collapse in global commodity prices. Since Lok Sabha has already approved the proposed law, The Mines and Minerals (Development and Regulation) (Amendment) Bill, 2016, is just one step away from becoming a law—it now only requires the President’s signature. Once the Bill is signed into law, there will be no bar on the transfer of mining leases.

As per the Amendment, the companies acquiring the cement units will now have raw material security as they can access limestone mines belonging to the acquisition targets.

In 2015, the government brought The Mines and Minerals (Development and Regulation) Amendment Bill, replacing a 1957 legislation which stipulated that mining licences could only be auctioned. This amended law allowed transfer of mines allotted through auctions but was silent on captive mining licences handed out in the past on the basis of recommendations of a screening committee. That discouraged deals among companies.

Did You Know?

• To get the mining sector back on track, the Narendra Modi administration introduced the auction process for mines after the allotment of more than 200 coal mines was scrapped by the Supreme Court of India in September 2014.
• The apex court had ruled that the process adopted for allocating the mines was flawed, after a scandal broke out during the Congress-led United Progressive Alliance’s regime over the way coal fields had been allotted.
• The Comptroller and Auditor General of India said in a 2012 report that coal mine allocations had caused the exchequer a notional loss of Rs.1.86 trillion.