India’s Cabinet Approves Mining Bill on Profit Sharing
India’s cabinet approved a bill that will make companies mining coal and other minerals pay for development of areas where they operate, Information and Broadcasting Minister Ambika Soni said today in New Delhi.
The Mines and Mineral Development and Regulation Bill provides for coal companies to share 26 percent of their profit, while other miners must pay an amount equal to the royalty collected by the government for mineral extraction, Coal Minister Sriprakash Jaiswal said today in New Delhi.
Coal India Ltd. (COAL), the world’s biggest producer of the fuel, fell as much as 5.3 percent to 332.20 rupees, the lowest since March 11, and traded at 335.70 rupees as of 1:01 p.m. in Mumbai. The BSE India Sensitive Index, or Sensex, lost 0.7 percent.
The bill, which will replace laws drafted more than five decades ago, aims to win support for industry from local people who have received little or no benefit from the mining of resources. Their exclusion has made many remote Indian villages a rich recruiting ground for Maoist rebels.
The guerrillas are active in a dozen of India’s 28 states, many of which are rich in iron ore, coal, bauxite, manganese and other minerals. India could lose $80 billion of investment in developing mineral deposits should the government fail to stop rebel violence, London-based Execution Noble Ltd. has said.
The Federation of Indian Mineral Industries had opposed the proposal to share profits with local populations in its meetings with the mines ministry. Mining companies argue the proposals will deter investment.
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