- Why in news
- On 10 April 2026 the Ministry of Mines notified the Third Amendment Rules, 2026 to the Mineral Concession Rules. They set a method to publish average sale price (ASP) of haematite iron ore below 45% Fe, including BHQ and BHJ (release dated 14 April 2026).
- What it is
- The Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules are made under the MMDR Act, 1957. They govern how mineral concessions are granted and operated. The ASP of a mineral grade is used to work out royalty and auction premium payable by miners.
- Notification
- The Third Amendment Rules, 2026 were notified on 10 April 2026 by the Ministry of Mines.
- Run-of-mine
- Run-of-mine is raw, unprocessed material from the mineralised zone of a lease area. Royalty is chargeable on lumps and fines after initial screening if processing lowers its economic value.
- Parent law
- The rules are framed under the Mines and Minerals (Development and Regulation) Act, 1957.
- Contiguous area cap
- A one-time extension of a mining lease (ML) can add contiguous area of up to 10% of the existing area. For a composite licence (CL) the cap is 30%. This applies to deep-seated minerals.
- Payment for added area
- For an auctioned ML or CL, the holder pays 10% of the auction premium on minerals dispatched from the added area. For a lease granted without auction, the holder pays an extra amount equal to the royalty.
- Associated minerals
- The State Government must permit the inclusion of another mineral, including a minor mineral, in a mining lease within 30 days of the application.
- Minor mineral leases
- Future minor mineral leases (other than sand) can be granted only after exploration up to G3 level. If a major mineral is found, the State auctions the area as a major mineral block.
- Captive mine sales
- The limit on sale of minerals from captive mines is removed. Sale is allowed after meeting the needs of the linked end-use plant. If the plant runs below full capacity, only the quantity equal to what the plant consumes in a financial year may be sold.
- Effective date of Act amendment
- The MMDR Amendment Act, 2025 took effect on 1 September 2025.
Don’t confuse with ASP vs MSP: ASP here is the average sale price of a mineral grade used to compute royalty and premium. MSP is the government's minimum support price for crops.
Don’t confuse with Threshold value vs reserve price: Threshold value is the grade limit below which ore counts as waste. Reserve price is the minimum bid price in a mineral block auction.
Don’t confuse with Mining lease vs composite licence: A mining lease allows extraction of a mineral. A composite licence covers both prospecting and mining. The contiguous-area cap is 10% for a mining lease and 30% for a composite licence.
Don’t confuse with Major vs minor minerals: Major minerals are regulated mainly by the Centre under the MMDR Act. Minor minerals, such as sand, are notified by the Centre, but the State Governments make the rules for them and grant the leases.
Laws, judgments and statutory bodies: 30 Prelims questions since 2013 (what the law says, who chairs, legal basis). In Mains, 44 news-triggered questions, most in GS2, asking for provisions and challenges.
Why it matters
- Makes beneficiation of low-grade iron ore economical, easing pressure on high-grade reserves.
- Supports mineral conservation and steady ore supply to the steel industry.
- Adding adjoining areas lets deep-seated minerals be mined that would not pay as a separate lease.
- Higher critical mineral output supports Atmanirbhar Bharat. More captive-mine sales improve supply for MSMEs.
Problems
- Beneficiation needs investment, technology, water and energy, and produces tailings.
- Setting ASP by fixed percentages may not track real market prices.
- States must meet fixed timelines, such as the 30-day limit, and may lack the capacity to do so.
- Mining raises environmental and local community concerns, and extending leases adds to them.
Way forward
- Promote beneficiation technology and tailings management.
- Review the ASP percentages periodically against market data.
- Improve State capacity for exploration and quick processing of applications.
- Pair expansion of mining with strict environmental clearance and community safeguards.
Put in your answer
Mineral conservation: Using low-grade resources serves conservation and scientific, optimal mining.
Contiguous area limits: The caps of 10% for a mining lease and 30% for a composite licence show how rules balance optimal mining with limits on expansion.
Incentive for critical minerals: No additional amount is charged for including critical, strategic or deep-seated minerals listed in the Seventh Schedule.
- 2025Mains GS3 · Q17Why is mining an environmental hazard, and what remedial measures are needed?
- 2021Mains GS1 · Q5Why India's mining contribution to GDP is low despite mineral wealth.
- 2020Mains GS3 · Q11Meaning of investment; factors in designing public-private concession agreements
- 2013Mains GS3 · Q19Consequences of illegal mining; MoEF go and no-go zones for coal
- 2025Prelims Q89Can states make minor mineral concession rules; central role in notifying minor minerals
- 2019Prelims Q62Which statements on minor minerals: sand status, state lease powers, rule-making
- 2025Prelims Q6Statements on MMDR 2023 amendment enabling central auction of critical mineral leases
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: Lasting topic on mining policy and iron ore beneficiation, already on file; few testable facts. Laws and rules were 23 of 327 news-linked Prelims questions.
Worth revising until Prelims 2027: most news questions come within two years of the event.