Cement Manufacturers Association (CMA)

38 Major Threats for Limestone mining leases associated for Captive usage Limestone being the major raw material for cement manufacturing, it is predicted that there will be shortage of limestone resources, especially for operating mining leases associated with active cement units. Extensive work is required towards exploring limestone resources, adding more resources for operating mines, adding through participation in auctions. Presently cement companies are facing resource quality deterioration and availability at depth, with constraints such as forest area, land purchase related issues. All these factors are contributing to addition of mining cost. It is estimated that present operating mining leases accounting for 10% of limestone reserves will expire in 2030 and another 14% will expire in 2030-35. There are multiple mine leases that will expire in 2030 & over 2030-35. (source: report of Ambit Capital Pvt Ltd, published in March’22). It is estimated based on publicly available data for >250 limestone mines cumulating to >20 billion tonnes of reserves. Most of existing major cement players will be exposed to such expirations. Post the amendment of MMDR Act in 2015, the Limestone resources will have to be obtained by participating in auctions, being announced by various states, by paying additional premium price over the royalty & other applicable taxes, and also maximum time limit for captive mining leases has been set. The amendment Act specifies that any lease granted before the commencement of the Amendment Act, shall be extended: (i) up to March 31, 2030, for minerals used for captive purpose (specific end-use), or (ii) till completion of renewal period, or (iii) for a period of 50 years from the date of grant of such lease, whichever is later. This means leases which were granted before 1980 and/or will complete renewal period by 2030, will lapse by 31st Mar’30. On the expiry of the lease period, these mining leases shall be put up for auction by the State Govt as per MMDR Amendment Act 2015, but existing captive mines lessee, will have the right of first refusal [Section 8A (7)]. Existing captive lease holder would like to retain this re-auctioned deposit – to support existing infrastructure, lower freight cost and keep their mining cost low. But limestone is found in clusters. There will likely be other cement plants in the vicinity, and they may compete through auction to enhance their resources and life of mine. Post this exercise, the existing lessee have to match the highest bid offered for the auction block. Even if the existing lessee wins the mine back, it will entail higher cost vs past, therefore generating lower profitability. If the existing lessee fails to win the mine back, it may have to look for an alternative deposit, which may mean high auction premium + higher freight cost/t. In a worst-case scenario, the plant may have to shut down temporarily or may be permanently for want of limestone mining lease. Current Status Presently, all existing cement units are associated with limestone mining lease which were executed or currently in the process of executing supplementary lease deeds with the State Govts. after paying stamp duty and registration charges. It is pertinent to note that cement companies have made significant investments in these mining leases and on expiry of these leases in 2030, our operations will heavily disrupt so on to downstream manufacturing such as cement plants. The intended measure would adversely impact the lessee financially whilst distressing the