Ministry of Mines Notifies Mineral Concession Rule Changes to Expand Critical Mineral Mining

The Ministry of Mines has notified the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession (Second Amendment) Rules, 2026, introducing a detailed framework for expanding mining lease areas and including additional minerals within existing leases.

The amended rules, notified on March 30, 2026, follow changes made through the Mines and Minerals (Development and Regulation) Amendment Act, 2025, which came into effect on September 1, 2025. The reforms are aimed at increasing the exploration and production of critical, strategic and deep-seated minerals required for industry and clean energy sectors.

Under the new rules, holders of mining leases and composite licences for deep-seated minerals will be allowed a one-time extension of their lease area to include adjoining or contiguous land.

For mining leases, the additional contiguous area cannot exceed 10 percent of the existing lease area. For composite licences, the additional area cannot exceed 30 percent of the existing licence area.

Where the original mining lease or composite licence was granted through auction, the leaseholder will have to pay an additional amount equal to 10 percent of the auction premium on minerals dispatched from the newly added area. If the original lease was granted without auction, the leaseholder will instead have to pay an amount equivalent to the royalty on minerals extracted from the added area.

According to the Ministry, the provision is intended to enable optimal extraction of deep-seated minerals that may be spread across adjoining areas and may not be economically viable to mine under a separate lease.

The rules also introduce a mechanism for including associated minerals, including minor minerals, within an existing mining lease. State Governments have been directed to approve such applications within 30 days.

No additional payment will be required when the added mineral is a critical mineral, strategic mineral or deep-seated mineral listed in the Seventh Schedule of the MMDR Act. The government said this exemption is intended to encourage production of minerals that are often found in small quantities and are difficult to mine and process.

The amendment further lays down a procedure for including major minerals in leases originally granted for minor minerals before the MMDR Amendment Act, 2025.

For future minor mineral leases, except those involving sand, State Governments will now be required to ensure that the area has been explored up to the G3 level before granting a mining lease. If exploration identifies a major mineral deposit in that area, the State Government will be required to auction the block as a major mineral block.

The amended rules also remove the earlier restriction on the sale of minerals from captive mines.

Mining companies operating captive mines will now be allowed to sell surplus minerals after meeting the full requirement of the end-use plant linked to the mine. However, if the end-use plant is operating below its full capacity, the company will only be permitted to sell a quantity equal to the amount of mineral actually consumed by the plant during the financial year.

The Ministry said the change is expected to improve mineral availability in the market, particularly for micro, small and medium enterprises, while also improving ease of doing business in the mining sector.

The government added that the reforms are expected to increase production of critical, strategic and deep-seated minerals while also generating additional revenue for State Governments through higher output and payments.

The rules were framed after consultations with State Governments, Central Ministries, industry associations and other stakeholders.