Mining sector set for a major revamp

The government is aiming to overhaul the working of private mine developers and operators (MDOs) ahead of the first coal mining auctions with private company participation with wider plans for a massive increase in coal production. The PMO has suggested NITI Aayog to consult with industry to create a new legal framework and policy regime for private mine operators. MDOs play a vital role in the operation of coal mines, but there are challenges: they are illegal, and they are mostly selected for their ability to do the job at a low cost rather than for bringing in the technical expertise needed to scale up coal mining. The government's move comes amid plans by Coal India, the world's largest coal miner, to produce 1 billion tons a year by 2024. The PMO has asked NITI Aayog to frame guidelines for the selection and appointment of MDOs in consultation with secretaries from the Union ministries of mines, coal, steel and finance. In the mining industry, a mine owner often contracts the work of mine development to a third party MDO, especially in coal. The MDO oversees the whole range of activity, from mine design, planning and construction and rehabilitation of local populations to overburden removal, mining and processing and delivery of the mineral. So far, coal mine ownership has been restricted to PSUs like Coal India and NTPC or state, who have been the largest employers of MDOs. But with the commercial coal mining to begin in October, the MDO industry is expected to expand. However, outsourcing mining activity is illegal under the Contract Labour Act and the Mines and Minerals Act. PSUs and state governments have so far escaped a legal tangle with approval from the ministry of coal.