Welcome end to captive mining, almost

In the Mines and Minerals Amendment Act, 2021, the provision for fresh captive mining has been revoked. This is most welcome. Yet, a sensible phasing out of captive mining is surely warranted. Enterprises that have captive mines have an unfair competitive advantage over those that do not. In addition, the captive mines do not produce to their optimal capacity nor do they produce at optimal efficiency. Captive mines must be phased out. Those with captive mines should be given a reasonable lead time to adjust themselves to buying the mineral in question from the market, that is all.

Captive mines do not cause any direct loss of revenue to the exchequer. Captively mined minerals also bear the same royalty as any other mineral, at the rate notified for the purpose. Rather, it imposes two kinds of indirect costs on the economy. One, it creates an unlevel playing field for those with and without captive mines. Two, suboptimal production by captive miners could result in an avoidable shortage of the mineral in question, leading to imports and a drain on foreign exchange. By ending the practice of captive mining prospectively, some of the problem is solved. To solve the problem in its entirety, existing holders of captive mines should be persuaded to give up their leases, voluntarily, based on incentives or by a change in the law. By reassigning captive mines to specialist, professional miners, all users of the minerals in question could benefit from lower prices and plentiful supplies.

While transferring environmental clearance from the entity carrying out the mining operation to the mining operation itself, so that change of ownership would not entail fresh clearances, is welcome, periodic review of environmental impact is essential.