Indian Panel Suggests No Profit-Sharing Clause in New Mines Law

A panel of Indian lawmakers proposed dropping a clause from planned mining laws that requires coal and lignite companies to share their profits with local communities and pay for development projects where they operate.

Companies mining the two fossil fuels should instead contribute an amount equal to the royalty paid to state governments for mineral extraction during the fiscal year, the cross-party group said today in a report tabled in parliament. That would put them in the same position as miners of iron ore and other commodities under the Mines and Mineral (Development and Regulation) Bill, 2011.

If accepted by the government and approved by parliament, the recommendation may reduce the financial burden the legislation imposes on miners including Coal India Ltd., the world’s largest producer. Under the existing draft legislation, coal miners had to set aside 26 percent of their profits. The government is setting up a fund to address concerns that local people don’t benefit from environmentally damaging mining operations.

Prime Minister Manmohan Singh is aiming to replace an act passed by lawmakers in 1957 and to win support for industry from local people who have protested the setting up of facilities on land near their communities. In some parts of eastern and central India, anger over resource exploitation has helped Maoist rebels recruit support.