Polity & GovernancePriority2025-08-19

Mines and Minerals Amendment Bill, 2025 Passed

Why focus: Parliament Act with strict numeric provisions (royalty 2% to 3%)—GS2 Polity/GS3 Economy, ideal for 'How-Many-Correct' statements.

In News

What Happened

In August 2025, Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act, 2025. The legislation renames the national exploration trust, increases its royalty funding from 2% to 3%, and empowers the government to establish electronic Mineral Exchanges. It also completely removes sales caps on captive mines and allows existing leaseholders to mine newly discovered critical minerals without extra charges.

Why It Matters

This legislation is a massive push to secure India's supply of critical minerals (like lithium, nickel, and cobalt) essential for the clean energy transition, electric vehicles, and national security. By encouraging zero-waste mining and allowing overseas exploration, it directly reduces India's heavy import dependence amid global supply chain disruptions.

Background

History & Context

The Mines and Minerals (Development and Regulation) Act, 1957, is the principal legal framework governing India's mining sector. It was significantly amended in 2023 to allow private sector exploration of critical minerals. However, persistent import dependence for energy-transition minerals led the Ministry of Mines to launch the National Critical Mineral Mission (NCMM) earlier in 2025. To provide statutory backing for the NCMM's objectives, the 2025 Amendment Bill was introduced in the Lok Sabha on August 11, 2025. It sought to liberalize the sector further, focusing on deep-seated minerals, transparent pricing, and sustainable zero-waste frameworks.

What Changed

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National Mineral Exploration Trust (NMET) Expanded: BEFORE, NMET was limited to domestic exploration and funded by a 2% royalty levy. NOW, it is renamed the National Mineral Exploration and Development Trust (NMEDT), funded by an increased 3% royalty levy, and its mandate is expanded to finance offshore and international exploration.
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Inclusion of New Minerals in Leases: BEFORE, a mining lease was strictly granted for a specific mineral, requiring a complex process if new minerals were found. NOW, leaseholders can extract newly discovered minerals in their area. For critical/strategic minerals (Part D, First Schedule), this requires zero additional payment, while other major minerals require payment per the newly added Eighth Schedule.
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Captive Mine Sales Cap Removed: BEFORE, captive mines could only sell up to 50% of their annual mineral production in the open market after meeting their own end-use requirements. NOW, this 50% cap is entirely removed, allowing 100% open market sale of surplus.
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Establishment of Mineral Exchanges: BEFORE, there was no statutory electronic marketplace for minerals in India. NOW, the Central Government is empowered to set up and regulate 'Mineral Exchanges' for the transparent trading of minerals, concentrates, and their derivatives.
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Contiguous Area Expansion for Deep-Seated Minerals: BEFORE, expanding a lease area for deep-seated minerals (depths below 200m) required applying for a separate lease. NOW, state governments can grant a one-time contiguous area extension of up to 10% for Mining Leases and 30% for Composite Licences.
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Sale of Mineral Dumps for Zero-Waste Mining: BEFORE, legacy stacked mineral dumps could not be easily monetized or cleared. NOW, State Governments are empowered to authorize the sale of old mineral dumps stacked in the leased area, subject to additional payments specified in the Sixth Schedule.

What Did NOT Change

Despite the broad liberalization allowing the inclusion of new minerals in existing leases, the strict regulatory boundary regarding atomic minerals remains intact. An atomic mineral discovered above a specified threshold grade still cannot be included in a standard mining lease granted for non-atomic major or minor minerals.

Prelims Angle

NCERT Connection

This heavily updates concepts in Class 12 Geography (India: People and Economy) Chapter 5 - 'Minerals and Energy Resources'. The NCERT discusses the geographical distribution and conservation of traditional minerals. However, this 2025 amendment represents a paradigm shift from simple conservation to 'Zero-Waste Mining' and securing 'Critical Minerals', reflecting India's modern transition from focusing on iron ore and coal to prioritizing lithium, cobalt, and deep-seated resources essential for global clean energy goals.

Common Misconceptions

✗ Since minerals are a state subject, state governments have exclusive rights to auction all critical and strategic minerals.

✓ Under Part D of the First Schedule of the MMDR Act, the Central Government holds the exclusive authority to auction mining leases and composite licences for 24 specified critical and strategic minerals.

People conflate ordinary major and minor minerals (where states have primary auction and royalty rights) with the newly classified critical/strategic minerals which are controlled by the Centre for national security.

✗ Under the 2025 amendment, leaseholders can add any newly discovered mineral to their existing lease for free.

✓ Only specific critical and strategic minerals can be added without additional payment to incentivize their production. Adding other non-critical major minerals requires an additional payment as per the new Eighth Schedule.

Headlines focused heavily on the 'free inclusion of critical minerals' provision, leading students to overgeneralize this exemption to all minerals.

Practice Questions

Q1

How Many Correct

Consider the following statements regarding the Mines and Minerals (Development and Regulation) Amendment Act, 2025: 1. It removes the 50% open market sale restriction on surplus minerals extracted from captive mines. 2. The mandate of the newly renamed National Mineral Exploration and Development Trust (NMEDT) is strictly restricted to domestic and offshore exploration within India's territorial waters. 3. Adding newly discovered critical minerals listed in Part D of the First Schedule to an existing mining lease requires a mandatory auction premium payment. How many of the above statements are correct?

Q2

Match the Following

Match List I (Provisions under MMDR Amendment Act 2025) with List II (Associated Limits/Rates): List I A. NMEDT royalty contribution rate B. Limit on open market sale of minerals from captive mines C. Maximum contiguous area expansion for Composite Licences D. Maximum contiguous area expansion for Mining Leases List II 1. 30% 2. 3% 3. No limit 4. 10% Select the correct answer using the code given below:

Q3

Assertion & Reason

Assertion (A): The MMDR Amendment Act, 2025 introduces the Eighth Schedule to mandate additional payments for adding any new mineral to an existing mining lease. Reason (R): The government aims to maximize revenue from the extraction of critical and strategic minerals which are in high global demand. Select the correct answer:

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