Reservation, Conservation and the Power to Prospect

In one line

The Act is not only a machine for granting leases: it also lets the Government keep an area out of anybody's hands and puts a duty on it to conserve the mineral.

In the wording a student can write in an exam: section 17A(1) empowers the Central Government, with a view to conserving any mineral and after consulting the State, to reserve any area not already held under a licence or lease; section 17A(1A) and (2) empower the Central and the State Government respectively to reserve an area for prospecting or mining through a Government company or corporation; section 18(1) makes it the duty of the Central Government to take all steps necessary for the conservation and systematic development of minerals and for the protection of the environment by preventing or controlling pollution caused by prospecting or mining, with a rule-making power; and section 17 gives the Central Government special powers to prospect or mine itself.

Section 17A: reservation

Section 17A(1), reservation for conservation. "The Central Government, with a view to conserving any mineral and after consultation with the State Government, may reserve any area not already held under any prospecting licence or exploration licence or mining lease and, where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved."

That is the conservation power in the Act, and it is the answer to a question about how the law provides for future generations: a proved deposit can simply be taken off the market.

Section 17A(1A) and (2), reservation for a Government company. The Central Government in consultation with the State, and the State Government with the approval of the Central Government, may reserve an unheld area for prospecting or mining through a Government company or corporation owned or controlled by it, again by notification specifying the boundaries and the minerals.

Section 17A(2A) then requires the State Government to grant the licence, lease or composite licence to that Government company within the period specified; and a proviso requires the previous approval of the Central Government for a Part B atomic mineral.

Section 17A(2B), the joint venture rule. Where the Government company or corporation wishes to work in a joint venture, the joint venture partner shall be selected through a competitive process, and the Government company or corporation shall hold more than seventy-four per cent of the paid up share capital. That provision exists because a reservation to a Government company was otherwise an easy route round the auction: reserve, then bring in a private partner.

Section 17A(2C) requires a lease granted under (2A) or (2B) to be granted on payment of such amount as specified in the Fifth Schedule, which the Central Government may amend by notification for reasons recorded in writing. So even a reserved area is not free: the Government company pays the Fifth Schedule amount in place of the auction premium.