The Union government has proposed to revoke its 2019 ban on private entities mining beach sand minerals even as Gautam Adani's Adani Group registered two new companies dealing with the same minerals. The world’s fourth richest man, whose investments range from media and telecom to coal and cement, is all set to step into the beach sand mining (BSM) industry to process and sell titanium dioxide, ilmenite, rutile, garnet, sillimanite, and leucoxene.
In February 2019, the Narendra Modi government cited national security as a reason for keeping private players out of the extraction of these minerals which are used in the production of atomic energy. The total ban on export and beach sand mining by private companies was hailed as a visionary step toward safeguarding the strategic interests of the country.
In an apparent U-turn, on May 25 this year, the Ministry of Mines drafted a proposal to allow the return of private companies into the sector by amending the Mines and Minerals (Development and Regulation) Act, 1975 (MMDR Act) and invited suggestions/comments from various stakeholders including Union ministers, state governments, mining companies and the public. The consultation ended in August this year, and the amendments are expected to be tabled in Parliament as early as in the Winter Session.
A month before the government circulated the draft for public consultation, on 14th and 27th of April , the Adani Group informed Bombay Stock Exchange (BSE) about the incorporation of two wholly owned subsidiaries named Alluvial Heavy Minerals Limited in Andhra Pradesh and Puri Natural Resources Limited in Odisha that would process and manufacture beach sand minerals, especially titanium dioxide (TiO2).
Sources in the mining industry say the entry of a corporate giant like the Adani Group is the strongest indication that the Union government is likely to revoke the existing ban on private players in beach sand mineral mining.
Ministry of Corporate affairs documents with TNM show the objectives of the two new Adani companies are: “To carry on in India or elsewhere in the world, all or any industry, trade, importing & exporting of all type of goods, infrastructure developments including the business to develop and operate the coal & other minerals mines and blocks including development, processing of minerals, TiO2 Slag manufacturing, Pigment manufacturing, titanium sponge & metal manufacturing, monazite processing, selling heavy minerals including, but not limited to Ilmenite leucoxene, rutile, zircon, garnet, sillimanite, rare earth minerals processing, manufacturing and production of rare earth Chlorides, oxalates/carbonates, oxides, metals, manufacturing and production of sintered and bonded permanent magnet and sales thereof and operation of coal & other minerals blocks as contractor or subcontractor or in any other form and to prospect for, explore, mine, quarry, beneficiate, develop, derive, discover, excavate, dredge for, open, work on mine, win, purchase, crush, polish, smelt, manufacture, process, generate etc.”
Importantly, the proposal also seeks to give the Union government the power to auction mining leases for these minerals, which have been the domain of state governments so far. State governments are designated owners of all the land in their respective territories. Meaning, states have primacy in the control of their natural resources and they play a significant role in auctioning mineral blocks and issuing of mining licences to private companies, after obtaining clearance from the Ministry of Mines.
If this proposed amendment goes through, state governments fear that they will lose their exclusive rights to issue mining licences and the move is being seen by critics as an attempt to curtail the powers of state. This could deepen the growing discord between the state and central governments and create a federal crisis. The proposed amendments are not only seen as an attempt to usurp the powers of the State government’s but also a threat to national security.
It remains to be seen how the Modi government pushes the legislation through considering a majority of beaches are located along peninsular India in opposition ruled states such as Tamil Nadu, Kerala, Andhra Pradesh and Odisha.
According to industry insiders, if these proposed changes in the MMDR Act take shape, smaller players who are involved in beach sand mining will not stand a chance. “Big corporations will have access to all the mines,” a source said.
Following the ban on beach sand mining in 2019, the Union government instructed the state governments to terminate the mineral concessions granted in favour of private firms to mine beach sand minerals.
According to industry insiders, all private mining leases for beach sand minerals were terminated by the state governments with ‘retrospective effect’, barring a few mining leases where the companies approached the courts and got it stayed. Some of the private beach sand mining companies were granted leases for 30 to 50 years in states such as Kerala, Tamil Nadu, Andhra Pradesh, and Odisha.
According to a Tamil Nadu government Industries Department document related to premature termination of mining concession available with TNM, “In view of the amendment made to Schedule-I of the Atomic Minerals Concession Rules, 2016, and as requested by the Central Government in its order dated 01.01.2019, the State Government has to pass orders for premature termination of mining leases held by private parties/companies in Tirunelveli, Thoothukudi, Kanyakumari and Tiruchirappalli Districts.”
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In 2013, a major controversy erupted after allegations of large-scale illegal sand mining was reported in Thoothukudi district. The then Chief Minister J Jayalilathaa ordered a probe and suspended the beach sand mining activity in the state. Seventy one large beach sand mining quarries operating in Tirunelveli, Kanyakumari, Trichy and Madurai districts came under the scanner for illegal mining.
Later, a PIL was filed in the Madras High Court alleging collusion between bureaucrats and politicians in allowing illegal mining in southern Tamil Nadu. The petitioner alleged that due to the nexus between officials and private miners the state exchequer had suffered a loss of several lakh crores. The Madras High Court appointed senior advocate V Suresh as the amicus curiae and in his status report the amicus curiae had pointed out that about 90 lakh tonnes of beach sand had been illegally mined from 412.99 acres in Thoothukudi district.
In 2017, the Satyabrata Sahoo Committee which was appointed by the Madras High Court reported a mismatch of 69 lakh tonnes of minerals stocked and quantum declared by the leaseholders. However, the matter is still pending in the Madras High Court.
In April 2022, when the matter came up for hearing in the Madras High Court, the Ministry of Mines said that the matter related to regulation and controlling of illegal mining lie within the domain of the state government and the responsibility of preventing illegal beach sand mining is with the Tamil Nadu Government.
In this backdrop, the Modi government is likely to open up beach sand mining for private players once again. This time around, the likely entry of the Adani Group into the industry has raised eyebrows within the industry.
Beach sand minerals consists of several minerals such as ilmenite, rutile, zircon, garnet, sillimanite, monazite and leucoxene. In 2016, the Ministry of Mines made an amendment to Part B of the First Schedule of the MMDR Act and included beach sand minerals into the atomic mineral category. Among these minerals monazite is an atomic mineral from which nuclear fuel thorium is extracted. Thorium, a strategic metal which is the primary source for India’s three-stage nuclear power programme.
The MMDR Act classifies minerals under three categories: A, B and C. Part A consists of Hydrocarbons or Energy Minerals. Part B consists of Atomic Minerals and is not open to private players. Part C consists of Metallic and Non-metallic Minerals.
Now, the Ministry of Mines proposes to create a new category or Part D for ‘Critical and Strategic Minerals’, and shift eight minerals from Part B to Part D. The minerals include Beryl and other beryllium-bearing minerals; Lithium-bearing minerals; minerals of the "rare earths" group containing Uranium and Thorium; Niobium bearing minerals; Titanium bearing minerals and ores such as ilmenite, rutile and leucoxene; Tantallium-bearing minerals; Zirconium-bearing minerals and ores including Zircon; beach sand minerals, that is, economic heavy minerals found in the teri or beach sands, which include ilmenite, rutile, leucoxene, garnet, monazite, zircon and sillimanite.
The new Adani companies want to process and sell heavy minerals including Ilmenite, rutile leucoxene, garnet, zircon, sillimanite; develop and process monazite; and process rare earth minerals.
The notification calling for public comment says the reason for the proposal is that the minerals are “technology and energy critical, have uses in the space industry, electronics, information and technology and communications, energy sector, electric batteries and the nuclear industry and are critical in net zero emission commitment of India.” The government argued that the country is dependent on imports for most of these important commodities. These minerals have high economic importance and considerable supply risk due to geo-political uncertainties.
In an attempt to curb illegal mining of beach sand minerals, the Union government undertook a series of measures from 2015 to 2021 under Prime Minister Narendra Modi. In 2015, significant changes were made in the MMDR Act to regulate the mining industry. One notable move was to introduce an auction for allocation of all mineral concessions and empower the Union government to make separate rules for regulation of atomic minerals.
On July 11, 2016, the Ministry of Mines introduced the concept of “Threshold Value”, in order to ‘protect and conserve’ atomic minerals, by making changes in the Atomic Mineral Concession Rules 2016 (AMCR-2016). Through this amendment, private companies were barred from mining beach sand if the threshold limit for the presence of monazite in a given beach was above 0.75 percent.
In 2018, the Union government reversed its policy on exporting beach sand minerals by private firms. The Directorate General of Foreign Trade issued a notification imposing a ban on private players exporting beach sand minerals and decided that the export of beach sand minerals will be channelised only through the public sector undertaking Indian Rare Earths Limited (IREL).
However, on February 20, 2019 the Union government imposed a blanket ban on private companies engaged in beach sand mining. According to the Government of India, the decision to this effect was taken to “ensure complete government control over Monazite and Zircon occurring within the beach sand minerals”.
The Ministry of Mines amended the Atomic Mineral Concession Rules 2016 by bringing down the threshold value from 0.75 to 0.00 for the presence of beach sand minerals like Ilmenite, rutile, leucoxene, garnet, monazite, zircon and sillimanite. The amendment put an end to mining of beach sand by private players along the Indian coastline, and mining operations can only be carried out by central and state government undertakings.
Further, in order to keep a check on illegal mining, the MMDR Act was amended and penal provisions were added.
Speaking to TNM, environmental activist G Sundarrajan pointed out that the increase in sea erosion due to climate change and human activity including mining will result in displacement of fishermen from the coastlines. “The entire issue of climate change is threatening our beaches. On the one hand, India is addressing the COP-26 summit in Glasgow offering ‘Panchamrit’ to the world, and on the other side you say you are going to mine the beach minerals. This move by the Union government reeks of nepotism. This will destroy the environment,” he said.