Indian government clears proposal to amend MMDR Act

Indian government clears proposal to amend MMDR Act
14 March 2016

The Indian government has cleared a proposal to amend the mines and minerals law (MMDR Act) to allow the transfer of captive mines granted through non-auction routes, which of late has proved to be a stumbling block for two key acquistions in the domestic cement industry.

"The cabinet has approved the proposal allowing transfer of captive mines across sectors. We have received various representations from banks and associations saying the amendment will facilitate a number of mergers and acquisitions in the cement sector," said Balvinder Kumar of the Ministry of Mines, told local press.

The new MMDR Act, passed in January 2015, did not allow the transfer of allotted mining rights by one company or subsidiary to another. All the limestone mines held by cement companies until the January amendment had been allotted by the government.

The new MMDR Act impeded two large cement industry deals in the past year. Firstly, Birla Corp's proposed acquisition of 5.15Mta of cement assets from LafargeHolcim in east India was called off earlier this year. LafargeHolcim said the deal had been cancelled due to the MMDR restrictions on transfer of mining rights. LafargeHolcim is now looking to sell all of Lafarge India Pvt Ltd's 11Mta of cement assets in India to comply with both the current MMDR rules and the country's anti-trust regulations.

UltraTech's December 2015 deal with Jaiprakash Associates for its two cement assets in Madhya Pradesh for INR5bn was also called off on 26 February due to the MMDR regulations. The deal was later folded into a larger deal where UltraTech is now looking to buy Jaiprakash Associates' entire 22Mta of capacity.

Published under Cement News