Not a minor issue! Andhra CM N Chandrababu Naidu raises Major Laterite Matter with Centre

New Delhi: Andhra Pradesh CM N Chandrababu Naidu, a key NDA ally, has red flagged a policy change by the Centre that has brought to a standstill the award process for 402 mines in the state. The Union mines ministry recently issued orders, classifying laterite with more than 20% aluminium as a major mineral – governed by the Centre’s Mines and Minerals Development and Regulation Act. So far, laterite was classified as a minor mineral. In case of a minor mineral, the state can frame its own rules on royalty and award of lease on a first come, first served basis.

The new classification spells out that laterite with more than 20% aluminium will be classified as bauxite, a major mineral. Mining rights of major minerals are auctioned. The Act lays down a detailed process, which includes a geological survey and an auction. The process takes about five years to operationalise a mining lease.

With new classification, leases can no longer be awarded by the state. To award 402 mining leases, the government will first have to undertake a geological survey and gauge which mines have more than 20% aluminium laterite and then auction these.

“Usually, the mines ministry gives a transition period in case a mineral is reclassified as a major mineral,” a senior state government official told ET. “Since the award process of 402 mines was in progress, we cannot change it midway. Hundreds of applicants have spent crores in application fee, land acquisition and forest clearances as per the old regulations. If we change the process midway, it will expose the state government to a lot of litigation.”

If a transition period is not provided, the cash-strapped state faces the prospect of refunding the application fee. Other related processes have also been initiated. “A lot of laterite mining is in forest areas or on patta land. The process is that the applicant first buys patta land and then applies for a lease to mine laterite on that patta land. There have been financial transactions. All this can’t be revisited,” said the official.

Naidu has written to mines minister G Kishan Reddy and pointed out that when mica, quartz, feldspar and barytes minerals were reclassified as major minerals, the Centre had given a transition period. The CM has demanded that for laterite too: “A transition period of two years should be provided so that the pending applications can be processed under the old rules.”
Mica and quartz were reclassified as major minerals from minor minerals on February 20, 2025. The decision to put award of leases in abeyance has revenue repercussions as well. The state earned revenue of ₹2,400 crore last year from minor mineral mining and ₹1,000 crore from major mineral mining.