New Delhi: The Ministry of Coal has proposed removing the existing 50 percent ceiling and allowing leaseholders to sell legacy mineral stocks from captive mines in the open market, citing environmental, safety and operational risks from accumulated dumps. Industry representatives and several state governments have told the Centre that in many cases over half of the minerals extracted from captive mines may not get utilised in the associated end-use plants, leading to large accumulations of mineral stock over time.
Follow Energy Watch on X
In a consultation paper seeking public comments on proposed amendments to the Mines and Minerals (Development and Regulation) Act, 1957, the ministry said the accumulated dumps “not only pose environmental and safety risks but also occupy valuable space—particularly in smaller mines — reducing the area available for active mining operations.” It added that removing the ceiling would “help clear accumulated dumps and increase the overall availability of minerals in the market.”
The proposal follows representations that the current provision under Section 8(5) of the MMDR Act, which permits captive miners to sell up to 50 percent of annual coal or lignite production after meeting end-use requirements, has become restrictive in practice. According to the ministry, captive mines often generate mineral quantities “significantly higher than the needs of their end-use plants,” resulting in long-term stockpiling and deterioration in mineral quality.
While similar restrictions for non-coal minerals were removed through the MMDR Amendment Act, 2025, the coal ministry said reforms are now needed to align coal and lignite provisions with the amended framework and to address cases where operational mines are unable to supply linked end-use plants due to logistical or infrastructure constraints.
The consultation paper also proposes amending the definition of “mining operations” to explicitly include coal gasification. Describing gasification as a process that converts coal into synthetic gas for power generation, chemicals and fertilisers, the ministry said its inclusion would provide regulatory clarity and encourage adoption of cleaner coal technologies.
“Recognising its potential to reduce emissions and to enhance value addition to domestic coal, the Government of India has sought to integrate this process within the legal and regulatory framework governing mineral development,” the proposal said.
The ministry has also proposed reviewing statutory limits on the maximum area that can be held under prospecting licences and mining leases. It noted that the existing limits were set in the 1950s when coal mining was small-scale and technologically limited, and may no longer be suitable for modern, mechanised mining operations.
Citing the evolution of transparent auction systems and large integrated mining projects, the ministry said revisiting area ceilings could help “accommodate modern mining needs, promote strategic investments and enable adoption of future-ready technologies.”
Another major amendment under consideration is extending the maximum mining lease period for coal and lignite from 30 years to 50 years, without requiring renewal. The ministry said the current renewal requirement creates administrative burdens, planning uncertainty and delays, particularly where mine life exceeds three decades.
“A 50-year lease may provide the financial and operational security needed for cost recovery, long-term planning, optimal overburden management and improved reclamation and closure practices,” the consultation note said.
The proposal also flags the need to strengthen measures against illegal coal mining, which the ministry said causes “substantial loss of revenue to the exchequer, threatens legitimate mining activities, undermines labour safety and contributes to unregulated carbon emissions.”
While coal companies have deployed security forces and technology-driven monitoring systems, the ministry acknowledged that enforcement gaps and procedural limitations persist. It has proposed a comprehensive review of legal, administrative and technological powers available to coal company officials and security agencies to curb illegal mining, transportation and storage of coal more effectively.
Follow Energy Watch on LinkedIN
The ministry has invited comments from state governments, industry stakeholders and the public within 30 days as it moves to finalise amendments to the MMDR Act.
