UNIT 15

MINERAL ECONOMICS

Structure______________________________________________
15.1 Introduction 15.4 Mineral Conservation Laws
Expected Learning Outcomes Regulatory Framework for Mineral
Developments in India
15.2 National Mineral Policy
Mineral Concession System
Peculiarities associated with Mineral
Resources Mineral Conservation and
Development Rules-2017
Rationale of Mineral Policy
15.5 Exclusive Economic Zone
Objectives of National Mineral Policy
15.6 Seabed Mining Laws
Types of Policies
15.7 Summary
15.3 National Mineral Policy of India
15.8 Activity
Historical Perspective
15.9 Terminal Questions
National Mineral Policy-2019
15.10 References
15.11 Further/Suggested Readings
15.12 Answers

15.1 INTRODUCTION
You have been introduced in BGYCT-133 course that mineral resources are the backbone of the
economic growth of any country. We also know that mineral deposits are non-renewable resources,
therefore they must be used judiciously. A well-planned programme for their systematic exploration,
extraction and optimum utilisation is the basic requirement of any country guided by national goals
and perspectives. The economic principles, therefore, must be applied to the mineral resources and
related mineral-based industry for their proper governance and management.
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The academic discipline which deals with the economic and policy issues
associated with the prospecting, exploration, extraction, production, recycling
and application of mineral commodities is studied under the subject of ‘Mineral
Economics’. The origin of the term Mineral Economics can be traced back to
about 200 years in the writings of David Ricardo. However, it has developed as
a separate discipline of Applied Economics only after World War-II. Principles
and practices based on economic theories applied to understand various
aspects of the mineral industry is studied under mineral economics
(MacKenzie, 1987). Thus, mineral economics is a multidisciplinary branch
involving geology and economics disciplines. It also focuses on the optimum
use of mineral commodities and the conservation of its resources for future use.
In this unit, we will try to understand some of the basic aspects of Mineral
Economics.

Expected Learning Outcomes__________________________

After reading this unit you would be able to:
❖ appreciate principles of mineral policy and development;
❖ comprehend concepts of National Mineral Policy of India;
❖ know the salient features of India’s Mineral Conservation Rules
❖ introduce the concept of exclusive economic zones; and
❖ define Sea Bed Mining laws in India.

15.2 NATIONAL MINERAL POLICY

The minerals are indispensable not only for the well-beings of the human being,
but also for their survivals as these minerals are used by people directly or
indirectly in the everyday life. Minerals in different forms are required almost in
all the industries, therefore, they continue to occupy a distinctive place among
all the economic resources. However, no country has adequate resources
available for all the important minerals, hence is dependent on the import of
some minerals from another country. Therefore, it is required for every country
to formulate its own policy for the sustainable usage of its mineral resources,
keeping in view their peculiarities.
15.2.1 Peculiarities Associated with Mineral Resources
The minerals are used, sold and purchased mostly as raw materials like any
other economic commodity However, many peculiarities associated with the
mineral deposits make them different from other commodities. The features that
make mineral deposits unique and different from other commodities are:
1. Non-renewable nature of minerals: Most mineral deposits are formed by
various geological processes which took a long geological time to form. They
cannot be replenished again once exploited/ extracted from the Earth.
2. Finite quantity: Unlike, other natural resources like forest and wildlife,
mineral resources occur in limited finite quantity. The economic extraction of
minerals with profits does vary with the advent of technology. The low-grade
mineral can become economically viable with the introduction of new/
advanced technology of mining and beneficiation.
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3. Uncertainty about quality and quantity: Mineral deposits occupy a very

large volume deep inside the crust of the Earth; hence the direct
measurement of quantity and quality of the entire deposit is not possible.
The actual measurement is done only at sample points through drilling,
pitting or trenching, and further extrapolated to the entire deposit. There is
always certain amount of uncertainty regarding actual quality and quantity of
the entire body, however ore reserve estimates are close to the factual
value.
4. Geological complexity: We have studied in Block 2 of this course that the
mineral deposits are formed by several processes like magmatic,
hydrothermal, sedimentary, supergene enrichment, residual concentration
etc. However, it is not necessary that a particular mineral is formed by the
similar process everywhere. For example, the iron deposits in nature
possibly formed by any of the magmatic, hydrothermal and sedimentary
processes. However, the localisation of the minerals is controlled mainly by
parameters such as structure, stratigraphy and chemistry of the rocks in any
geographical setting. Thus, it creates a situation where two similar deposits
of the same minerals are highly unlikely and possibly vary in their size,
shape, quality and depth etc. Such complexities of mineral resources are
completely controlled by geological conditions and processes; hence each
deposit is unique.
5. Locational and distributional Peculiarities: Mineral deposits are
homogenously distributed in Earth’s crust. They do not know any political or
geographical boundaries. No country in the world is self-sufficient in all
minerals. However, few countries have monopoly on one type of deposit.
Many important wars waged between different countries recorded in the
history were for conflict over natural resources. In recent times, the conflict is
mainly due to competitive attitude to acquire more and more supply of
minerals. The international trade, stockpiling and supply of some critical
minerals to friendly nations only are some of the clashes arising out of
locational and distributional peculiarities of the mineral deposits.
15.2.2 Rationale of Mineral Policy
The policy is formulated to set-up certain principles and procedures for
regulating, developing and controlling respective sectors in the country under
certain rules and regulations. It is generally directed to achieve particular
objectives that provide a framework to enhance the industry's competitiveness.
The economic development of a country depends upon the quality of its policy
framework, especially the processes involved in formulating each decision.
The mineral resources of a country are the non-replenishable assets. The
exploration and exploitation of these resources are required to be performed
systematically and rationally keeping in view their long-term perspectives for
overall growth and development plans of the country. Each nation, therefore,
formulates a policy for exploration, exploitation and consumption of their
mineral resources, depending upon:
(a) available mineral inventory,
(b) its geo-political situation, priorities and
(c) defence preparedness.
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Such policy of the government deals with the long-term strategy for the
development of mineral resources and mineral/mining industries that
constitutes the essence of the National Mineral Policy of any country. It is
essentially a broad statement of objectives of mineral development which
indicates the direction of such type of expected development. It ultimately forms
the basis to formulate legislation. The Mineral Policy of any country not only
provides guidance and advice to different authorities and the mineral industry,
but also addresses the challenges and responds to important government
commitments.
A National Mineral Policy can also be viewed as a subset of the country’s
economic, trade and industrial policy. It must be compatible to the national
policies on the environment, foreign exchange and labour. Hence, the
formulation of mineral policy also requires a broad understanding of the macro-
economic parameters and strategies.
15.2.3 Objectives of the National Mineral Policy
You have learnt about need and background for formulation of National Mineral
Policy. Now let us read about it in this section.
The specific goals and objectives of a National Mineral Policy vary with the
unique attributes and needs of the nation. For example, the Mineral policy of a
mineral-rich, highly industrialised nation (e.g., USA, Canada, Australia) may not
be appropriate for a mineral-poor industrialised nation (e.g., Japan and
Germany) which largely depends upon import for the mineral supply to their
industries. Similarly, the policy for a mineral-rich developing country (e.g., India,
Chile, Brazil) will be somewhat different as compared to minerals poor non-
industrialized country (e.g., Nepal, Bangladesh).
The Mineral Policy of any country should be an explicit and comprehensive
document and must help in serving three principal functions:
1. To guide mineral industries at the government's position regarding key
issues.
2. To guide government departments, administrators and lawmakers on the
direction and expectation of the nation about regulating the sector.
3. To act as a consensus-building tool, allowing important issues to be
identified, discussed and agreed upon before detailed legislative drafting and
administrative revisions.
The objectives of the National Mineral Policy briefly include the following:
1. To provide a fair and balanced fiscal and regulatory framework.
2. To foster a viable mineral sector for ensuring mineral supplies.
3. To improve mineral conservation and use.
4. To promote improved technical performance and increased
international competitiveness in all facets of the industry.
5. To facilitate enhanced mineral exports and access to new and
traditional markets.

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6. To strengthen overall contribution of minerals in regional and national

development.
7. To protect fragile environment and promote sustainable development.
The specific issues commonly addressed in the National Mineral Policy (NMP)
is grouped mostly within six broad categories. They are (Fig. 15.1):
• Scope,
• Sovereignty,
• Economic Considerations,
• Quality of Life,
• Regulatory Agencies, and
• Legislative Framework.

Fig. 15.1: Broad issues addressed in the National Mineral Policy.

15.2.4 TYPE OF POLICIES

In the previous section you have learnt that the mineral policy of any country
describes the strategic direction it intends to take to sustainable development
its mineral resources. This acts as the basis for the formulation of legislation/
regulations. Let us now read about the types of policies being adopted by
various countries.
Mineral policies of any country is linked to its prosperity, security, foreign policy,
financial position etc. Like any other economic policy, the National Mineral
policy can also be of the three types:
(a) Open Door Policy: In open door policy the country allows private
enterprises from any country to undertake exploration and mineral
development. Many developed countries like USA, Canada and Australia
follow such policies.
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(b) Close Door Policy: The practice of restricted business with

other countries, companies, organizations, etc. comes under such policies
and prohibits foreign direct investment. The government has the major role
to play in the exploration and exploitation of mineral resources. Many of the
sub-Saharan's countries follow the Close door Policy.
(c) Mixed type of Policy: Cautious and restrictive approaches are prevalent in
such type of policies. Some of the strategic mineral development remains
in the hands of the government, while for other minerals the private
enterprises take part in their development. India used to follow such type of
policy for the past few years, however, India have started following open-
door policy under the New Mineral Policy. Examples of mixed-type policy
are China, Afghanistan and Mongolia etc.
Apart from these policies some of the industrial countries, in which mineral
resources are not adequate and dependent on import of many minerals to fulfil
needs of their industries (e.g., Japan and Germany), a policy of recycling and
substitution of other material in place of minerals/ores are followed.

15.3 NATIONAL MINERAL POLICY OF INDIA

Let us now discuss about the National Mineral Policy of India. India produces
86 minerals, out of which four used as fuels, 10 metallic minerals, 46 industrial
minerals, 3 atomic minerals and 23 minor minerals including building materials.
The mining sector in India accounts for about 2.5% of the total GDP. Since the
time of independence, the mineral development in India evolved through
various strategies and policies, in line with the changing socio-economic
scenario within and outside the country. The Constitution of India allows the
constituent State Governments/Union Territories be the owners of the minerals
in their respective territorial jurisdiction. In the off-shore areas, the exclusive
economic zone and the continental shelf, the rights are vested in the Central
Government barring a few minerals. Recently the Government of India has
announced the new National Mineral Policy 2019 and replacing the NMP-2008.
15.3.1 Historical Perspective
Before the independence, the ores and minerals were explored and mined
mostly by the private people/ companies. Most of the raw minerals produced
from Indian mines were primarily meant to feed foreign industries’
requirements. The safety and welfare of the mine workers were governed by
the Indian Mines Act 1903 and 1923 that resulted in arbitrary and unsystematic
exploitation of Indian mineral resources. For the first time in Independent India,
the Mineral Policy Statement came in to existence as a part of the Indian
Industrial Policy Resolution-1948 and suggested regulations and control of
mines and minerals. This resolution resulted the first legal framework of
independent India in form of the Mines and Minerals (Development and
Regulation) Act, 1948. Indian Bureau of Mines was also established in 1948 to
regulate and monitor mining activities in the country.

This policy was subsequently replaced by the second Industrial Policy in 1956
which is followed by the Mines and Minerals (Development and Regulation) Act,
1957 and Mineral Concession Rules 1960. According to this, the state
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governments /public sectors enterprises have exclusive rights to develop all the
major minerals, listed in Schedule A (such as coal, lignite, mineral oil, iron ore,
copper, zinc, atomic minerals, etc.). The other minor minerals listed in Schedule
B were opened for the development by the private as well as public sectors.
The minor minerals are considered to be of the local importance and are
supposed to be developed on a small scale for the benefit of local people. The
minor minerals include: building stone, marble, gravel, chalcedony, pebble,
limestone for lime burning, brick earth, fuller's earth, bentonite, clay and sand.
These minerals are used for the non-industrial purposes, road metal, slate and
shale etc. The afore mentioned Acts was amended subsequently in different
years.

A separate comprehensive National Mineral Policy (NMP) was notified by the

Government of India for the first time in March 1993 with the idea to encourage
private investments in the exploration and mining. However, the desired results
of NMP1993 could not be obtained even in a decade, the policy was further
revised in form of NMP 2008 (for non-fuel and non-coal minerals). Measures
were articulated in NMP-2008 to streamline and simplify procedures related to
grant of mineral concessions in order to develop a sustainable outline for best
utilization of natural mineral resources for industrial growth in the country.
These measures would at the same time improve the livelihood of backward
class and tribal people living in the mining areas. In 2017, the Supreme Court of
India, while delivering judgement on “rapacious” mining in Odisha (Keonjhar
and Sundargarh), directed the Government of India to revisit the NMP-2008 and
announced a fresh, more effective, meaningful and implementable policy. It has
resulted in the form of a latest New National Mineral Policy in 2019 (NMP-
2019). Each of these policies has its own salient features.

Let us now know about the latest National Mineral Policy of India.

15.3.2 National Mineral Policy - 2019

The aim of the National Mineral Policy- 2019 is to have a more effective and
meaningful policy that brings transparency, better guideline and
implementation, balanced social and economic growth and also sustainable
mining practices. Some of the changes introduced in the new National Mineral
Policy-2019 include the focus on the “Make in India” initiative, gender
sensitivity, use of coastal waterways and inland shipping and dedicated mineral
corridors to facilitate transportation of minerals. It also aims to attract private
investment through incentives. More emphasis is given to e-Governance, IT-
enabled systems, awareness and Information campaigns in NMP-2019. It also
proposes to a long-term export-import policy in the mineral sector to provide
stability and incentives for the investment in the large-scale commercial mining

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activity. It also introduces the concept of Inter-Generational Equity that deals

with the well-being of the present generation. It also deals with the well-being of
the generations to come and also advises to constitute an inter-ministerial body
to institutionalise mechanism to confirm sustainable development in mining
sector.

Salient Features: The salient features of this policy are:

1. Exploration, extraction and management of minerals need to be led by
national goals and perspectives and united to the overall strategy of the
country’s economic policy. Emphasis on the promotion of domestic
industry, reduction of import dependency has been added.

2. Natural resources (including minerals) are in shared inheritance, where the

State is a trustee on behalf of the people. So, allocation of mineral
resources must be done fairly and transparently to ensure balanced
distribution of mineral wealth to sub-serve the common good.

3. Mining needs to be carried out in an environmentally sustainable manner

keeping stakeholders participation and transfer of benefits to the mining-
affected persons.

4. Emphasis is given on the regional and detailed exploration in a systematic,

scientific and intensive manner over the entire geologically conducive
mineral bearing areas of the country, using state-of-the-art technology,
seismic interpretative systems in a time-bound manner.

5. The private sectors need to be encouraged to take up exploration activities.

Government agencies will expend funds, mostly in areas where private
sector investments are not approaching due to high uncertainties.

6. Introduction of ‘Right of First Refusal’ at the time of auction. Seamless

transition from Reconnaissance permit to Prospecting Licence to Mining
Leases. [Right of First Refusal: When a firm/company that has a
reconnaissance permit (RP) finds evidence of minerals, informs the
government. When government auction off the area, such firm/company
would be given the area for mining.]

7. Introduction of auction of composite Reconnaissance permit, Prospecting

License and Mining Lease in virgin areas on a revenue-sharing basis.

8. Establishment of a Mining Tenement System (MTS) which would primarily

involve in automating the complete concession life-cycle using state-of-the-
art IT systems.

9. The policy proposes to grant the status of ‘industry’ to mining

activity for financial boost-up of mining in the private sector.

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10. The Policy also mentions making efforts to harmonize taxes, levies and
royalty with world benchmarks to help the private sector.

Expected Outcome: The outcomes projected from these policy proposals

are an increase in the production of Mineral Conservation and Development
Rules, 2017 minerals in terms of value by 200 % in 7 years. On the other hand,
decrease the trade discrepancy in minerals sector by 50% in 7 years.

In the previous sections, we studied about the National Mineral Policy, its
objectives and salient features. Before going to the next section spend 5
minutes to check how you are progressing.

SAQ 1
a) What are the main objectives of National Mineral Policy?
b) When was the first separate National Mineral Policy of India declared?
c) When was the latest National Mineral Policy of the country adopted?

15.4 MINERAL CONSERVATION LAWS

In the above section you have read about National Mineral Policy-2019. Now,
let us discuss about regulatory framework for mineral developments in India.
Legislations for mineral resources and mining are required for planned
economic development, strategic considerations and conservation of resources
for future use in the present day diverse socio-political system. We have learnt
in the previous section that the first industrial policy resolution - 1948
encompasses the first mineral policy statement in independent India which
resulted in the constitution of the Mines and Minerals (Development and
Regulation) Act,1948. In this section, we will try to understand some of the
mineral legislations in India.

15.4.1 Regulatory Framework for Mineral Developments

in India
The Mines and Minerals Development and Regulation Act, 1957, ('MMDR') and
the Mines Act, 1952, organised with the rules and regulations framed under
them, establish the basic laws governing mineral and mining sector in India.
MMDR Act-1957 applied to all minerals except petroleum. The MMDR Act was
revised on numerous occasions to deliver a fair concession regime to invite
private sector investments into exploration and mining sector. Government
control over mining was further expended by amending the MMDR Act in 1972.
In 1986 more stringent amendments were made by increasing the First
Schedule minerals from 27 to 38 and also making mining plan approval
compulsory. MMDR Amendment Act, 2015, substituted the first-come-first-
served/discretionary process for grant of mineral resources by a transparent
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and competitive auction process. The most recent amendment in the MMDR
Act was carried out by the Mineral Laws (Amendment) Act, 2020 to ease out
business and opening commercial mining and allowing domestic as well as
global investors to invest. Important mining regulations enacted by the
Government of India as summarised in Table 15.1.
Table 15.1: List of important mining regulations in India.

ACT Mining Regulation Basic Provision

Defines the process and timelines of
Mineral Concession the grant of mineral concessions as
Rules (MCR), 1960 per the provisions of Section 13 of
the MMDR Act, 1957.

Mineral and Prescribes guidelines for the

Mining Mineral conservation and development of
(Regulation Conservation and minerals as per the provisions of
and Development Rules Section 18 of the MMDR Act, 1957.
Development (MCDR), 2017 The rules cover procedures for
Act, 1957 carrying out prospecting and mining
operations. It covers requirement
related to the preparation of mining
and prospecting plans, filing of
notices and returns, and guidelines
for the protection of the environment.
Various State Governments have
State Minor Mineral prescribed rules for the grant of
Concession Rules mineral concessions with respect to
minerals classified as minor minerals
under the MMDR Act, 1957.
Mines Act, Mines Rules, 1955 Prescribes the laws related to the
1952 Indian Coal Mines regulation of health, sanitation safety
Regulation, 1957 and welfare for miners and their
families. Regulations for carrying out
Indian Metalliferous
mining operations, management and
Mines Regulation,
inspection of mines and procedure of
1957
reporting to be followed are part of
Oil Mines
this.
Regulations, 1963
Coal Mines Coal Mines The main function is to look after the
(Conservation (Conservation & stowing needs of mines in the
and Safety) Safety) Rules, 1952 interest of conservation.
Act, 1952
Atomic It provides wide powers to Central
Energy Act, Government for the regulation of
1962 prospecting and mining of minerals
used in the production of atomic
energy.
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Oil Field Petroleum It deals with the procedure and rules

(Regulation Concession Rules regarding grant of exploration licence
and 1949 and mining lease.
Development)
Act, 1948
Offshore Offshore Areas Provides for the development and
Areas Mineral Mineral Concession regulation of mineral resources in the
(Development Rules, 2006 territorial sea, continental shelf, EEZ,
and and other maritime zones of India.
Regulation)
Act, 2002
Mineral Laws The amendment is carried out to
(Amendment) take forward the agenda of ease of
Act, 2020 doing business & opening in the
mining sector and allowing domestic
as well as global investors to invest.

15.4.2 Mineral Concession System

In the above section we have read about important mining regulations in India.
Now, let us discuss the mineral concession system of India. In the national
structure of India, the State Governments are the owner of the minerals located
within the boundaries of the State concerned. As per Article 297 of the
Constitution of India, the Central Government is the owner of the minerals
underlying the ocean within the territorial waters or the Exclusive Economic
Zone of India. The State Governments grant the mineral concessions for all the
minerals located within the boundary of the State under the provisions of the
Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) and
Mineral Concession Rules, 1960 (MCR). Prior approval of the Central
Government, however is required in some cases.
There are three kinds of mineral concessions:
• Reconnaissance Permit,
• Prospecting License, and
• Mining Lease.
1. Reconnaissance Permit (RP): This permit is approved for preliminary
prospecting of a mineral through regional, aerial, geochemical or
geophysical surveys and geological mapping. The reconnaissance permit for
any mineral or related minerals is granted for 3 years and a maximum area
of 5,000 sq. km, to be abandoned progressively. After 2 years, the area
should be reduced to 1,000 sq. km or 50% of the area granted, whichever is
less. At the end of third year, the area held under a reconnaissance permit
should be reduced to 25 sq km. A reconnaissance permit holder must have a
preferential right to obtain PL(s) in the area concerned.
2. Prospecting License (PL): This permit is granted to undertake exploration
operations to locate and to prove mineral deposits. A PL for any mineral or
associated minerals is granted for a maximum period of 3 years. A PL can
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be renewed for the total period for which a PL is granted that does not
exceed 5 years. In a State, a person can be granted a maximum area of 25
sq. km in one or more PLs. But if the Central Government believes that in
the interest of the development of any mineral it is necessary to do so, the
maximum area limit can be relaxed.
3. Mining Lease (ML): This lease is granted to undertake mineral winning
operations of minerals. A ML for any mineral or associated minerals is
granted for a minimum period of 20 years and a maximum period of 30
years. The ML can be renewed for a period not exceeding 20 years each. In
a State, a person can be granted a maximum area of 10 sq. km in one or
more MLs. But if the Central Government believes that in the interest of the
development of any mineral it is necessary to do so, the maximum area limit
can be relaxed.
The Mineral Concession Rules, 1960 outline the procedures and conditions to
obtain a Prospecting License or Mining Lease. The Mineral Conservation and
Development Rules, 2017 lays down guidelines to ensure mining on a scientific
basis, whereas at the same time, conserving the environment. The provisions
of MCR and MCDR, but are not applicable to coal, atomic minerals and minor
minerals. The minor minerals that come under the purview of the State
Governments are separately notified.
In the next section, we will discuss in detail the Mineral Conservation and
Development Rules.
15.4.3 Mineral Conservation and Development
Rules- 2017
The Mineral Conservation and Development Rules (MCDR) were enforced for
the first time in 1955 to lay adequate emphasis on the systematic development
of mines, leading to the conservation of mineral resources. These rules derive
power from the MMRD Act 1948. Later with the adoption of MMRD Act 1957,
the MCDR were also changed and modified to MCDR 1958. The MCDR apply
to all minerals except for (i) petroleum and natural gas; (ii) coal, lignite and sand
for stowing; and (iii) minor minerals. The MCDR-1958 was repealed in 1988
and was replaced by MCDR-1988. Further, in supersession of the Mineral
Conservation and Development Rules, 1988, the Central Government replaced
it with the Mineral Conservation and Development Rules, 2017 by exercising
the powers conferred to section 18 of the MMRD Act, 1957.
As discussed in previous sections, the Mineral Conservation and Development
Rules (MCDR) provide guidelines to ensure mining operation including mine
closer on a scientific basis. The rules also define sustainable mining. The
MCDR-2017 defines various rules divided into 12 chapters. The rules
concerning the Reconnaissance and Prospecting Operations having 6 rules
regarding the scheme of Reconnaissance or Prospecting Operations, its
inspection by the competent authority and reports to be submitted by PL holder.
Rules for Mining Operations:
Rules for Mining Operations of MCDR-2017 comprises of 21 rules related to
Mining plan, operations in Open Cast mines, Underground mining operations,

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stacking of different grade of ores/non-salable minerals, beneficiation studies,

maintenance of records for machinery and plants, opening and closure plans of
mines, abandonment of mines, responsibilities of Mining Leaseholder etc.
Type of plans and sections and their preparation details defined in the rules are
also given in MCDR-2017. While conducting prospecting, mining, beneficiation
or metallurgical operations in the area, every holder of a mining lease is bound
to take all possible precautions to undertake sustainable mining. The other
environmental aspects of mining and related operations are also covered under
these rules.
Every RP/PL/ML holder is bound to the MCDR-2017 to appoint geologists and
mining engineers (whole time/part-time depending on the type of lease and
type of mines) for scientific operations.
For these rules, the mines are divided into two types as “Category – A” mines
and “Category- B” mines.
• The category 'A' mines: These mines are fully mechanised. The work is
being carried out for deep hole drilling, excavation, loading and transport. by
deployment of heavy mining machinery.
• Category 'B' mines mean mines other than category 'A' mines.
Rules regarding all other aspects of the mining operations such as submission
of annual and monthly returns, examination of mineral deposits and sampling,
preservation of cores, geological reports, revision, penalties and maintenance
of mining regulation portal etc. are also defined in the Mineral Conservation and
Development Rules – 2017.

15.5 EXCLUSIVE ECONOMIC ZONE

You must have heard about EEZ, i.e., Exclusive Economic Zone in news. Let
us read about Law of Sea before knowing about Exclusive Economic Zone.
The sea covers about 70% of the Earth’s surface. United Nations decided
unanimously in 1967 that the sea-bed and its resources are the common
inheritance of mankind and no state or person may appropriate the area or
exercise sovereignty over it. This was a landmark UN resolution in the history of
the Law of the Sea. The Law of the Sea came out in existence after very long
multilateral negotiations and several UN conventions on Law of the Sea held
since 1956. However, finally in 1982, UN conference on Law of the Sea
resulted in the Law of Sea Convention (LOSC) which came into force in 1994
upon receiving the necessary number of UN signatories. India is one of the
main signatories of the LOSC.
Broadly, the Law of Sea deals with:
• the territorial jurisdiction,
• continental shelf,
• right of navigation through the international straits,
• rights of the exclusive economic zone,
• management of resources of the international sea bed,
• marine pollution,

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• rights of landlocked countries, and

• mechanism of settling disputes.
Exclusive Economic Zone (EEZ):
In 1982 United Nations Convention on the Law of the Sea defined EEZ as an
area beyond and adjacent to the territorial sea under which the rights and
jurisdiction of the Coastal State and the rights and freedoms of other States are
governed by the relevant provisions accepted in this Convention. An Exclusive
Economic Zone (EEZ) is the area extending beyond and adjacent to the
territorial sea up to a maximum of 200 nautical miles from the baseline of the
territorial sea (Fig. 15.2). The baseline is normally measured as the low-water
line along the coast as indicated on large-scale charts (officially approved by
the coastal state). The EEZ does not include the territorial sea and the
continental shelf beyond 200 nautical miles.

Fig.15.2: A sketch showing Exclusive Economic Zone.

The Coastal States have certain sovereign rights in the Exclusive Economic
Zone which include:
1. Sovereign rights to explore and exploit, conserve and manage the natural
resources, whether living or non-living, in the waters superjacent to the
seabed and its subsoil;
2. Rights in regard to other activities of the economic exploration and
exploitation of the zone, such as production of energy from water-currents
and winds;
3. Right to establish and use artificial islands, installations and structures;

4. To do marine scientific research;

5. The protection and preservation of the marine environment.
However, in exercising its rights and performing its duties under this Convention
in the exclusive economic zone, the Coastal State is bound to have due regard
to the rights and duties of other States like freedom of navigation.
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We must understand that the territorial sea and the exclusive economic zone
are two different zones. The difference between the two is that the territorial sea
confers to full sovereignty over the waters, whereas the EEZ is merely a
"sovereign right" which refers to the coastal state's rights below the surface of
the sea. The surface waters in EEZ are international waters.
India with its long coastline of about 2750 nautical miles and 1280 islands are
having a vast interest in the development of its EEZ. India has enacted the law
in 1976 known as The Territorial Waters, Continental Shelf, Exclusive
Economic Zones and Maritime Zones Act, 1976 to outline limits of the
territorial waters, continental shelf, EEZ and other maritime zones of India. As
per this act, land minerals and other resources underlying the ocean within the
territorial waters, the continental shelf or the Exclusive Economic Zone are
vested with the Union of India. It also provides the legal framework:
• Specifying the nature, scope and extent of India’s rights;
• Jurisdiction and control of various maritime zones;
• Maritime boundaries between India and its neighbouring countries; and
• The exploration, exploitation, conservation and management of natural
resources within the maritime zones.
The total area included within the EEZ of India is about 20,00,000 square
kilometers. The famous Bombay High oilfield, which is 63 nautical miles off the
western coast of India, falls in this zone.

15.6 SEABED MINING LAWS

In the above section you have read about EEZ. Now, let us discuss about
Seabed Mining Laws. The presence of polymetallic nodules lying on the deep
floor of the high seas evoked a lot of interest in Sea bed mining. As per articles
151 and 153 of the United Nations Convention on the Law of the
Sea (UNCLOS), the International Seabed Authority (ISA) is in charge of
regulating and administrating deep-sea economic exploitation. The International
Seabed Authority (ISA) has issued several Regulations on Prospecting and
Exploration for Polymetallic Nodules in the Area 2000 which later updated in
2013. ISA also issued the Regulations on Prospecting and Exploration
for Polymetallic Sulphides in the Area 2010 and the Regulations on Prospecting
and Exploration for Cobalt-Rich Crusts- 2012.
Regarding the exploitation of these resources in the areas of the seabed
beyond the continental shelf, the ISA has come up with Draft regulations
for exploitation of mineral resources in the area in April 2018, for
discussion and adoption.
In the previous sections we have studied about the mineral conservation laws,
exclusive economic zones and seabed mioning laws. Now spend 5 minutes to
check how you are progressing.

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SAQ 2
a) Which is the main Act for the development of minerals and mining in
India?
b) What is Mineral Concession rule?
c) What is the difference between territorial sea and EEZ?
d) Name the international authority for regulating and administrating deep
15.7seaSUMMARY
economic exploitation.
Let us summarise what we have learnt in this unit.
• Nations formulate a policy for exploration, exploitation and consumption of
their mineral resources depending upon the available mineral inventory, geo-
political situation, priorities and defence preparedness.
• The National Mineral Policy is a subset of the country’s economic, trade and
industrial policy. It must be in tune with the national policies on the
environment, foreign exchange and labour.
• The Mineral Policy of any country not only provides guidance and advice to
different authorities and the mineral industry, but also addresses the
challenges and responds to important government commitments.
• National Mineral policy can be of the three types: Open door policy, Close
door policy and Mixed type of policy.
• In India, the Mineral Policy Statement came in to existence as a part of the
Indian Industrial Policy Resolution-1948. Indian Bureau of Mines was also
established in 1948 to regulate and monitor mining activities in the country.
• In 2017, the Supreme Court of India, announced a fresh, more effective,
meaningful and implementable policy which has resulted in the form of a
latest New National Mineral Policy in 2019 (NMP-2019).
• The Mines and Minerals Development and Regulation Act, 1957, ('MMDR')
and the Mines Act, 1952, together with the rules and regulations framed
under them constitutes the basic laws governing the mineral and mining
sector in India.
• The MMDR Act has several inbuilt rules and regulations which include the
Mineral Concession Rules (MCR- 1960) and Mineral Conservation and
Development Rules (MCDR-2017).
• In India, the State Governments are the owner of the minerals located within
the boundaries of the State concerned. The Central Government is the
owner of the minerals underlying the ocean within the territorial waters or the
EEZ as per Article 297 of the Constitution of India.
• In 1982, UN conference on Law of the Sea resulted in the Law of Sea
Convention which came into force in 1994.

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Unit 15 Mineral Economics
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• As per articles 151 and 153 of the United Nations Convention on the Law of
the Sea, the International Seabed Authority is in charge of regulating and
administrating deep-sea economic exploitation.

15.8 ACTIVITY
• Make a flow chart to organise various stages as prescribed in the
Concession system for getting the RP to ML.

15.9 TERMINAL QUESTIONS

1. Discuss in brief the latest NMP of India.
2. Describe different types of mineral policies.
3. Write in details about various types of Mineral Concessions.

4. Write in detail about MCDR.

5. What is the purpose of the Exclusive Economic Zone?

15.10 REFERENCE
• Chaterjee, K.K., (2008) Introduction to Mineral Economics, New Age
International, 379p.
• Ray, S.C., and Sinha, I. N., (2016) Mines and Mineral Economics, Phi
Learning Pvt Ltd. 241p.
• https://ibm.go
• https://mines.gov.in
(Websites accessed between 03/04/2021 and 10/08/2021)

15.11 FURTHER/SUGGESTED READINGS

• Chaterjee, K.K., (2008) Introduction to Mineral Economics, New Age
International, 379p.

15.12 ANSWERS
SAQ 1
a) The objectives of the National Mineral Policy briefly include the following:
i) To provide a fair and balanced fiscal and regulatory framework.
ii) To foster a viable mineral sector for ensuring mineral supplies.
iii) To improve mineral conservation and use.
iv) To promote improved technical performance and increased
international competitiveness in all facets of the industry.
v) To facilitate enhanced mineral exports and access to new and
traditional markets.
vi) To strengthen overall contribution of minerals in regional and national
development.
vii) To protect fragile environment and promote sustainable development.
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b) A separate comprehensive National Mineral Policy was notified by the

Government of India for the first time in March 1993.
c) 2019.
SAQ 2
a) Mineral and Mining (Regulation & Development Act, 1957).
b) The Mineral Concession Rules, 1960 framework the procedures and
conditions to obtain a Prospecting License or Mining Lease.
c) The territorial sea confers to full sovereignty over the waters, whereas the
EEZ is merely a "sovereign right" which refers to the coastal state's rights
below the surface of the sea. The surface waters in EEZ are international
waters.
Terminal Questions
1. Please refer to section 15.3.
2. Please refer to sub-section 15.2.4.
3. Please refer to sub-section 15.4.2.
4. Please refer to sub-section 15.4.3.
5. Please refer to section 15.5.

220
 GLOSSARY

Ammeter : An ammeter (ampere meter) is a measuring instrument used

to measure the current in a circuit and is measured in
amperes (A). An ammeter is connected in a series with the
circuit in which the current is to be measured.

Auger Drilling : In auger drilling system, rock is cut and broken with the help
of a simple blade bit mounted on the end of a rotating string
of rods. As the drill advances, extra rod sections are added to
the top of the drill string. It is a popular method when an
overburden penetration is necessary to obtain a small
bedrock sample.

Blanket Deposit : It is a flattened ore deposit whose length and width is more
than its thickness. Traditionally, this term is used by miners
and has no real scientific meaning.

Bivariate : It is used to find out if there is a relationship

Analysis between two different variables.

Caliper Log : It is used to measure the width/dia of the borehole.

Cliff : It is a vertical, or nearly vertical, rock exposure formed as

erosion landforms by the processes of weathering and
erosion. Cliffs are very common in mountainous areas, on
coasts, escarpments and along rivers.

Contact Deposit: : This term is mainly used for mineral deposit occurring
between the two dissimilar rocks. This type of ore body
occurs at the contact of sedimentary and igneous rocks.

Country Rock: : Non-mineralised bedrock enclosing an orebody.

Density Logs : The application of this tool is very similar to that of the sonic
logging tool except that it uses the emitted gamma radiation
in place of sound waves.

Desktop Surveys : Include researching the available geological information for

an area of interest. It includes analysis of previous geological
reports, exploration data, if any, etc. This process allows an
exploration company or prospector to make an informed
decision before applying for a license or starting any actual
field work.

Diamond Bit : A rotary drilling bit that uses diamonds as the cutting edge.

Diamond Drill : A drill used to collect core samples from rock.

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Diamond Drilling : Diamond drill of rotary type is the most versatile and
extensively used tool in the mineral exploration. Diamond
drilling uses a rotating hollow diamond-encrusted drill bit to
grind or cut the rock producing a cylindrical core sample.

Disseminated : Ore deposits consisting of fine grains of ore mineral dispersed

through the host rock.

Eddy-Current : Eddy currents (also called Foucault's currents) are loops of

electrical current induced within the conductors by a changing
magnetic field in the conductor according to Faraday's law of
induction. Eddy currents flow in closed loops within
conductors, in planes perpendicular to the magnetic field.
(Source: en.wikipedia.org)

Electromagnetic : It is used to determine the amount of water/oil present in the

Propagation Log formation and can be used to distinguish between oil and
water in porous formations.

Epithermal : These are formed at shallow depths away from the surface
Deposits: and the temperature ranges from 50°C - 200°C.

Epigenetic : The ore deposit formed after the formation of host rock in
Deposit which they occur, e.g., vein. These ore minerals have been
introduced into pre-existing country rock after their formation.

Feasibility Study : The study is to confirm and maximize the value of the
preferred technical and business options identified in the pre-
feasibility study stage.

Fluxgate : It is an electromagnetic device that is used to directly sense

Compass the direction of the horizontal component of the Earth's
magnetic field. It employs two or more small coils of wire
around a core of highly permeable magnetic material.

Gamma-Ray Log : It is used to record the natural gamma-ray radioactivity in the

rocks that comes from the decay of isotopes of potassium,
uranium and thorium. The gamma-ray log is often used to
determine the ‘sand: shale ratio’ in a clastic succession.

Geological : A mapping process to produce a special-purpose map

Mapping showing distribution of geological features such as rock
types, mineralization, faults, folds, foliations, lineation, joints,
etc.

Geophone : A geophone is a device that converts ground movement

(velocity) into voltage. It may be recorded at a recording
station. The deviation of this measured voltage from the base
line is called the seismic response.

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Geophysical : Refers to recording or mapping of physical properties of rocks
and minerals through an application of physics.

Gondites : Manganese bearing, non-calcareous rocks metamorphic

rocks that are equivalents of argillaceous and arenaceous
sediments and characterised with a mineral composition of
spessartite and quartz.

GPS Survey : GPS (or global positioning system) uses signals from
satellites to pinpoint a location on the Earth's surface.
GPS also provides data about velocity and time
synchronisation for various forms of travel.

Hypothermal : These deposits are formed at great depths near the intrusion
Deposits and the temperature ranges from 300°C - 500°C.

Kodurites : Group of rocks formed by assimilation of manganese ore and

manganese silicate minerals with the involvement of acidic
magma. These manganese rich rocks constitute minerals
such as garnet sillimanite gneiss, quartzite, garnetiferous
quartzite, calc granulites and gneisses.

Magnetometer : It is a device that measures magnetic field or magnetic dipole

moment. It also measures the direction, strength, or relative
change of a magnetic field at a particular location.

Mesothermal : These deposits are formed at a depth of 1500 to 4000 m

Deposits below the surface and the temperature ranges from 200°C -
300°C.

Mineral Deposit : Any occurrence of a valuable product or mineral that is of

sufficient size and grade that has potential for economic
development under favourable conditions.

Mineral : Refers to an exploration of geological resources such as

Exploration or minerals and rocks for various uses. It is the process of
Exploration determining grade and reserve of identified potential
geological resources for economic extraction.

Mineral : It is a permit that provides right to explore or study the

Exploration permitted area to determine the grade and reserve of the
Permit minerals for economic extraction.

Mineral : The geological study of searching and locating prospective

Prospecting or minerals, rocks, or fossils, with the use of handheld tools only.
Prospecting

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Mineral : It is a sign of mineralisation that is well-intentioned of further
Occurrence investigation.

Mineralogical : It is a scientific study of chemistry, crystal structure, and

Study physical and optical properties of minerals for identification
purpose.

Multivariate : It is the analysis of three or more variables.

Analysis

Neutron Logs : The neutron log provides a measure of the porosity of the
formation.

Overhauser : Overhauser (or Overhauser effect magnetometer or

Overhauser magnetometer) is used to measure very small
variations in the Earth's magnetic field. It uses the same
fundamental effect as the proton precession magnetometer to
take measurements which can sample faster and are more
sensitive.

Percussion : It utilises rapid hammering/ percussion action to break the

Drilling rocks into chips. In percussion drilling compressed air is used
to drive a hammer unit which imparts a rapid beating action to
a drilling bit at the end of a length of steel rods.

Pillar : A volume of unmined rock left in place for structural support

or as a barrier to water and/or gas.

Pitting : It is digging of shallow depth holes in the Earth’s surface for

determination of mineralisation continuity, size and shape,
and sampling purpose.

Pleochroic : They deposits are circular little areas, characteristically

Haloes present in few minerals that tend to be strongly pleochroic.
Biotite, tourmaline, hornblende, chlorite, muscovite, cordierite
and fluorite often contain pleochroic haloes. They are
resulted due to the presence of radioactive inclusions in
these minerals.

Proton-Precision : Proton-precision [or proton magnetometer, or proton

precession magnetometer (PPM)] is used to measure very
small variations in the Earth's magnetic field,
allowing ferrous objects on land and at sea to be detected. It
uses the principle of Earth's field nuclear magnetic
resonance (EFNMR).

Reserve : Mineral resources that have been discovered, having a

known size and can be extracted at a profit at a given point of
time.

Resistivity Log : It is used to measure the electrical conductivity of the rocks

and their pore fluids. Permeability can also be assessed by

224
 this method.

Rotary Drilling : In rotary drilling, the drilling results from the continuous
rotation of the bit under constant pressure. The samples are
recovered by grinding and rotation of the drill rod without
hammering.

Sampling : It is the process of taking a small portion of the target

mineral/sample such that the consistency of the part shall
symbolize the entire area.

Sonic Log : It is used to record velocity of soundwaves in the rock

formation. As the sound velocity in the rock depends on its
lithology and porosity of the rock or density of the rock, the
depth wise record of density, lithology and porosity can be
recorded by this method.
Syngenetic : The ore deposit formed by the same process and at the same
Deposit time as the enclosing rock in which it occurs is sometimes
part of a stratigraphical succession, such as an iron-rich
sedimentary horizon.

Theodolite : A precise instrument used for measuring angles in the

horizontal and vertical planes. They are described according
to the angle reading system incorporated in the instrument.

Trenching : It is digging of shallow depth trenches on the Earth’s surface

for determination of mineralization continuity, size and shape,
and sampling purpose.
Triangulation : A triangulation station (or trigonometrical point / trig) is a
Station fixed surveying station, used in geodetic survey and other
surveying projects in its vicinity. Trigonometrical stations are
grouped together to form a network of triangulation.
Topographical : It is defined as the study and mapping of the features on the
Survey surface of the land, including features such as mountains,
rivers, highways, railroads etc.
Univariate : It is the simplest form of statistical data analysis, where the
Analysis data being analysed contains only one variable. Univariate
analysis describes the data and finds out patterns that exist
within it.

Voltmeter : A voltmeter is an instrument used for measuring electric

potential difference between two points in an electric circuit
and is connected in parallel. It takes negligible current from
the circuit due to its high resistance.

Waste Rock : Overburden or gangue material removed from the ore/coal

during mining or mineral processing.

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 NOTES

226
NOTES

227
 NOTES

228
Dear Learner,
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