The District Mineral Foundation and the Exploration Trust

In one line

A slice of every royalty now goes to a trust for the people the mine displaced or damaged, and another slice funds the exploration that finds the next mine.

In the wording a student can write in an exam: section 9B requires a State Government to establish, in any district affected by mining related operations, a non-profit trust called the District Mineral Foundation, whose object is to work for the interest and benefit of the persons and areas affected; a post-2015 lessee pays it, in addition to the royalty, an amount not exceeding one-third of the royalty, and a pre-2015 lessee an amount not exceeding the royalty itself, as the Central Government prescribes; and section 9C establishes the National Mineral Exploration and Development Trust, funded by a further payment by lessees, for regional and detailed exploration.

Why section 9B exists

Because for sixty years the money from a mine went to the State treasury and the costs stayed in the district.

A mine imposes local costs that no royalty repaid. Land taken, water drawn down or fouled, dust, blasting, heavy vehicles on village roads, and a population whose livelihood was agriculture or forest produce before the lease. The royalty went to the State, which spent it wherever it chose.

Section 9B, inserted by the amendment of 2015, redirects a share of that money to the district, and it is the most important redistributive provision in Indian mining law.

The provisions

Section 9B(1). "In any district affected by mining related operations, the State Government shall, by notification, establish a trust, as a non-profit body, to be called the District Mineral Foundation."

Section 9B(2). "The object of the District Mineral Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government."

Section 9B(3). The composition and functions shall be as the State Government prescribes; and by a proviso the Central Government may give directions regarding composition and utilisation of the fund.

Section 9B(4) is the provision a student should quote in full. In making those rules the State Government "shall be guided by the provisions contained in article 244 read with Fifth and Sixth Schedules to the Constitution relating to administration of the Scheduled Areas and Tribal Areas and the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996 and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006."

That single sub-section wires the mining Act into the tribal rights statutes, and it is the answer to MU's question about community rights: the money is not a grant, it is a statutory obligation to be administered with the Fifth Schedule, PESA and the Forest Rights Act in view.