Date: 2026-04-06Category: Press ReleaseState: Union GovernmentCountry: India
Ministry of Mines Notifies Amendments to the Mineral Concession Rules, Paving Way for Inclusion of Contiguous Area and Associated Minerals in the Mining Lease
**Executive Summary**
The Ministry of Mines notified the Minerals Concession (Second Amendment) Rules, 2026, on March 30, 2026, to implement provisions of the MMDR Amendment Act, 2025. The rules establish a framework for including contiguous areas and associated minerals in existing leases to boost the production of critical and deep-seated minerals. These reforms aim to enhance the supply of minerals for industries and promote "Atmanirbhar Bharat" through simplified, time-bound administrative processes.
**Key Points / Main Content**
**Inclusion of Contiguous Areas**
* Mining Lease (ML) and Composite Licence (CL) holders for deep-seated minerals can apply for a one-time area extension to include contiguous land.
* The extension is capped at 10% for MLs and 30% for CLs relative to the existing lease area.
* For auctioned leases, holders must pay a 10% auction premium on minerals dispatched from the added area.
* For non-auctioned leases, holders must pay an additional amount equal to the royalty for minerals from the added area.
**Inclusion of Associated Minerals**
* Leaseholders may apply to include any other mineral, including minor minerals, in their existing mining lease.
* State Governments are mandated to permit such inclusions within 30 days of the application.
* To incentivize production, no additional charges are applicable for the inclusion of critical, strategic, or deep-seated minerals specified in the Seventh Schedule of the MMDR Act.
**Minor Mineral Lease Regulations**
* Future Mining Leases for minor minerals (excluding sand) can only be granted after exploration up to the G3 level.
* If major minerals are discovered during the exploration of a minor mineral area, the State Government must auction the area as a major mineral block.
* Provisions are also established for including major minerals in minor mineral leases executed before the 2025 Amendment Act.
**Sale from Captive Mines**
* Limits on the sale of minerals from captive mines have been removed to increase market availability, specifically for MSMEs.
* If an end-use plant operates at full capacity, the miner can sell any surplus minerals.
* If the plant operates below full capacity, the lessee is restricted to selling a quantity equal to the mineral consumed by the plant during that financial year.
**Impact Analysis**
**Stakeholder: Holders of Mining Leases (ML) and Composite Licences (CL)**
**Impact**
They gain the ability to expand operations into contiguous areas that were previously economically unviable and can now mine multiple minerals under a single lease. This promotes ease of doing business and operational efficiency.
**Action Required**
Submit applications for contiguous area extensions or mineral inclusions and ensure payment of the prescribed auction premiums or royalties for additional areas.
**Stakeholder: State Governments**
**Impact**
They will benefit from increased revenue through additional payments and higher mineral production. However, they are now subject to strict 30-day timelines for processing inclusion applications.
**Action Required**
Mandate G3 level exploration for minor mineral leases and transition discovered major mineral blocks to the auction process.
**Stakeholder: Captive Mine Lessees**
**Impact**
They receive greater flexibility to sell surplus minerals in the open market once end-use requirements are met, enhancing their commercial viability.
**Action Required**
Calculate permissible sale quantities based on the end-use plant’s operational capacity and annual consumption.
**Stakeholder: MSMEs and Industrial Consumers**
**Impact**
They will benefit from an increased and more stable supply of minerals in the market due to the liberalization of captive mine sales and the incentivized production of critical minerals.
**Action Required**
None specified in the document, though they may benefit from improved procurement opportunities.
Key Entities Referenced
Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession (Second Amendment) Rules, 2026: The specific rules notified to provide a mechanism for the inclusion of contiguous areas and associated minerals in mining leases and composite licences.
MMDR Amendment Act, 2025: The legislative amendment that enables increased exploration of critical minerals and serves as the basis for the 2026 rule changes.
Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act): The principal governing law for the Indian mining sector under which mineral concessions and regulations are established.
Ministry of Mines: The primary central regulatory body responsible for notifying these amendments and overseeing the administration of the mining sector.
Seventh Schedule to the MMDR Act: A specific section of the act that identifies critical, strategic, and deep-seated minerals eligible for royalty incentives under the new rules.
Ministry of Mines
Ministry of Mines Notifies Amendments to the
Mineral Concession Rules, Paving Way for
Inclusion of Contiguous Area and Associated
Minerals in the Mining Lease
Posted On: 06 APR 2026 7:29PM by PIB Delhi
The Ministry of Mines has notified the Minerals (Other than Atomic and Hydro Carbons Energy Minerals)
Concession (Second Amendment) Rules, 2026 on 30th March, 2026 providing detailed mechanism for
inclusion of contiguous area in the mining lease and composite licence of deep-seated minerals and
inclusion of associated minerals in the mining leases of major as well as minor minerals.
The amendment in the rules have been made pursuant to the amendments to the Mines and Minerals
(Development and Regulation) Act, 1957 (MMDR Act) through the MMDR Amendment Act, 2025
effective from 1st September 2025 which is aimed to increase exploration and production of critical
minerals required for the country. The reforms ushered by amendment gives impetus to the mining sector
to increase supply of minerals for the industries, leading to strengthening Atmanirbhar Bharat.
The Amended Rules provides simple and time-bound provisions for processing the application made by
the holder of a mining lease (ML) or composite licence (CL) of deep-seated minerals for one-time
extension of the area to include therein a contiguous area. In case of ML, the contiguous area shall not
exceed 10% and in case of CL, the contiguous area shall not exceed 30% of the existing area under the
lease or licence. If a contiguous area is added to an auctioned ML or CL, the holder must pay 10% of the
auction premium on minerals dispatched from that added area. If the lease was granted without auction,
the holder must pay an extra amount equal to the royalty on minerals dispatched from the added area.
Allowing inclusion of contiguous area will promote optimal mining of deep-seated minerals, which are
locked up in contiguous areas and may not be economically viable to be extracted under a separate lease
or licence.
The rules further provides the manner of inclusion of any other mineral, including a minor mineral, in a
mining lease and mandate the State Government to permit such inclusion within 30 days of the
application. No additional amount is applicable on inclusion of critical and strategic mineral or deep-
seated minerals specified in the Seventh Scheule to the MMDR Act to incentivise production of these
minerals which are found in small quantity and are difficult to mine and process.
The Amendment also provides the manner of inclusion of major minerals in a lease granted for minor
mineral which was executed before the MMDR Amendment Act, 2025. For grant of minor mineral leases
in future, the State Governments have been mandated that ML for minor mineral (other than sand) shall
only be granted after exploration of the area up to G3 level. In case, any major mineral is discovered in the
area upon the exploration, the State Government shall auction the area as a major mineral block. This is
yet another step for optimal mining.The rules were also amended pursuant the amendment in the Act to remove the limit on sale of minerals
from the captive mines. The miners can sell minerals after meeting the requirement of the end use plant
linked with the mine when the end use plant operates at its full capacity. In case the end use plant operates
at a capacity lower than its full capacity, then the lessee may sell only the quantity equal to the quantity of
mineral consumed in the end use plant in a financial year. This will increase mineral availability in the
market, including for the MSMEs.
The simpler regime provided in the Amendment rules will not only promote ease of doing business in the
sector but will enable increase in production of critical, strategic and deep-seated minerals. At the same
time, State Governments would also benefit from the additional payments and increase in production. The
rules were made after extensive consultation with the State Governments, Central Ministries, industry
associations and other stakeholders.
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Shuhaib T
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