Adani Forays Into The Beach And Mining Business While The Govt Mulls Over Whether Or Not To Lift The Ban.

Adani forays into the beach sand mining business while the government mulls over whether or not to lift the ban. Will It Limit The State’s Authority?

Even as Gautam Adani’s Adani Group formed two new firms dealing with the same minerals, the Union government has suggested lifting the 2019 restriction on private enterprises mining beach sand minerals. The fourth richest man in the world, whose investments span media, telecommunications, coal, and cement, is prepared to enter the beach sand mining (BSM) sector and process and sell leucoxene, garnet, sillimanite, titanium dioxide, and ilmenite.

The Narendra Modi administration used national security as justification in February 2019 for prohibiting private parties from participating in the extraction of these minerals, which are necessary for the creation of atomic energy. Private company beach sand extraction and export were completely prohibited, and this was applauded as a visionary move to protect the nation’s strategic interests.

The Mines and Minerals (Development and Regulation) Act, 1975 (MMDR Act), was amended on May 25 of this year in what seems to be a U-turn by the Ministry of Mines, who then solicited recommendations and opinions from a variety of stakeholders, including Union ministries, state governments, mining firms, and the public. The revisions are expected to be presented to Parliament as soon as the Winter Session after the consultation period is completed in August of this year.

On April 14 and 27, the Adani Group revealed to the Bombay Stock Exchange (BSE) that it had founded and fully owned two businesses. In Andhra Pradesh, the businesses are regarded as Alluvial Heavy Minerals Limited, and in Odisha, they are regarded as Puri Natural Resources Limited. These companies would produce and process beach sand minerals, chiefly titanium dioxide (TiO2). According to sources in the mining sector, the entrance of a corporate behemoth like the Adani Group is the clearest sign that the Union government is set to lift the restriction on private companies mining beach sand minerals.

Limiting the state’s authority?

The proposal also aims to grant the Union government the authority to auction mining leases for these minerals, a function that has previously been reserved for state governments. All of the land in each state’s distinct territory is officially owned by the state governments. It means that, after receiving approval from the Ministry of Mines, governments have primary sovereignty over their natural resources and play a key role in auctioning off mineral blocks and giving mining permits to private corporations.

Critics view the proposal as an effort to limit state authority because state governments fear losing their unique authority to provide mining licenses if the amendment is approved. This could exacerbate the deteriorating rift between the state and federal administrations and spark a crisis at the federal level. The suggested changes are seen as a danger to national security and an attempt to usurp the power of the State government.

It will be interesting to watch how the Modi administration extends the legislation given that the bulk of beaches in peninsular India is found in states with opposition governments, like Tamil Nadu, Kerala, Andhra Pradesh, and Odisha. If these proposed changes to the MMDR Act are implemented, smaller beach sand mining companies, according to industry insiders, won’t have a possibility. Big businesses will have access to all the mines, a source asserted.

The premature ending of mineral concessions in TN

The Union government authorized the state governments to cancel the mineral concessions given in favour of private companies to mine beach sand minerals after the prohibition on beach sand mining in 2019.

Industry sources claim that with the exception of a few mining leases where the businesses sought a stay of the termination from the courts, all private mining leases for beach sand minerals were halted by the state government with a “retrospective effect.” In states like Kerala, Tamil Nadu, Andhra Pradesh, and Odisha, some of the private beach sand mining businesses received leases for 30 to 50 years.

According to a document from the Tamil Nadu Industries Department, early termination of mining concessions is necessary “in view of the changes done to Schedule-I of the Atomic Minerals Concession Rules, 2016, and as demanded by the Central Government in its decision on 01.01.2019,” namely in the districts of Tirunelveli, Thoothukudi, Kanyakumari, and Tiruc.

Beach sand mining without a permit in Tamil Nadu

A significant quarrel broke up in 2013 following reports of comprehensive illicit sand mining in the Thoothukudi region. The state’s beach sand mining operations were suspended after the then-chief minister J Jayalalithaa launched an examination. 71 sizable beach sand mining quarries in the districts of Tirunelveli, Kanyakumari, Trichy, and Madurai were investigated for unauthorized mining.

Later, a PIL accusing politicians and bureaucrats of working together to permit illicit mining in southern Tamil Nadu was submitted to the Madras High Court. The petitioner argued that the state exchequer had lost several lakh crores due to the linkages between authorities and private miners. Senior attorney V Suresh was named as the amicus curiae by the Madras High Court, and in his status report, the amicus curiae noted that 412.99 acres in the Thoothukudi district had been illegally mined for nearly 90 lakh tonnes of beach sand.

The Satyabrata Sahoo Panel, which was formed by the Madras High Court, found that there was a disparity between the number of minerals stated by the leaseholders and the 69 lakh tonnes that were allegedly stored in 2017. However, the issue is presently under consideration by the Madras High Court.

When the matter was scheduled for trial before the Madras High Court in April 2022, the Ministry of Mines stated that the state government is in charge of regulating and controlling illegal mining and that it is up to the Tamil Nadu government to stop illicit beach sand mining. In light of this, the Modi administration is probably going to reinstate private participation in beach sand mining. This time, there have been questions regarding the Adani Group’s potential entry.

Numerous minerals, including ilmenite, rutile, zircon, garnet, sillimanite, monazite, and leucoxene, are found in beach sand. Beach sand minerals were added to the category of atomic minerals in Part B of the First Schedule of the MMDR Act by the Ministry of Mines in 2016. Monazite, an atomic mineral among these minerals, is used to produce the nuclear fuel thorium. The main component of India’s three-stage nuclear power program is thorium, a strategic metal.

Minerals are divided into three categories by the MMDR Act: A, B, and C. Hydrocarbons or Energy Minerals make up Part A. Private players are not allowed to access Part B, which comprises Atomic Minerals. Minerals, both metallic and non-metallic, make up Part C. The new Adani companies intend to develop and process monazite, process rare earth minerals, and market heavy minerals such as ilmenite, rutile leucoxene, garnet, zircon, and sillimanite.

The proposal’s justification is given as the minerals are “critical to technology and energy, have used in the space industry, electronics, information and technology and communications, energy sector, electric batteries, and the nuclear industry, and are critical in India‘s commitment to net zero emissions” in the notification inviting public comment. According to the government, the majority of these crucial commodities are imported into the nation. Due to geopolitical unpredictability, these minerals have significant supply risk and great economic relevance.

Restricting the extraction of minerals used to make beach sand

Under Prime Minister Narendra Modi, the Union government implemented a number of steps between 2015 and 2021 in an effort to stop the unlawful mining of beach sand minerals. To control the mining industry, essential revisions to the MMDR Act were adopted in 2015. One important thing that was done was to give the Union government the power to make its own rules for regulating atomic minerals and to sell all mineral concessions through an auction.

By amending the 2016 Atomic Mineral Concession Rules, the Ministry of Mines adopted the idea of “Threshold Value” on July 11 in order to “guard and conserve” atomic resources (AMCR-2016). With the passage of this amendment, private businesses were prohibited from mining beach sand if the threshold limit for monazite presence in a particular beach was higher than 0.75 per cent.

The Union government changed its stance in 2018 on the export of beach sand minerals by private companies. The Directorate General of Foreign Trade decided to prohibit private companies from exporting beach sand minerals and to only allow the PSUs Indian Rare Earths Limited to handle beach sand mineral exports (IREL).

However, the Union government outlawed beach sand mining by private enterprises on February 20, 2019. In order to “establish complete government control over Monazite and Zircon occurring within the beach sand minerals,” the Government of India claims that this decision was made.

The threshold value for the existence of beach sand minerals such as ilmenite, rutile, leucoxene, garnet, monazite, zircon, and sillimanite was lowered from 0.75 to 0.00 by the Ministry of Mines in an amendment to the Atomic Mineral Concession Rules 2016.
Only central and state governments are now allowed to engage in mining activities along the Indian coastline due to the amendment that made it illegal for private companies to do so. Furthermore, the MMDR Act was revised, and punitive penalties were included in order to keep an eye on illegal mining.

Environmental activist G Sundarrajan told TNM that the increased sea erosion brought on by human action, like mining and climate change, would force fishermen away from coastal areas. “The economic results of global warming are putting our beaches in peril. While you’re going to extract the minerals from the shore, India is giving a speech at the COP-26 summit in Glasgow and promising the world “Panchamrit.” The behaviour of the Union government reeks of favouritism. He warned that this would damage the ecology.

Edited by Prakriti Arora