‘The mechanism for compensating the affected people is not clearly defined and has many limitations'
Industry chambers led by Confederation of Indian Industry (CII) and FICCI on Friday sought a review of the Mines and Minerals (Development and Regulation) Bill, 2011 approved by the Union Cabinet stating that the industry was concerned on royalty, profit sharing and the methodology of providing assistance to project-affected persons.
In a statement here, Rana Som, CII National Committee on Mining, said the industry was concerned about the percentage of royalty/profit that industry was expected to contribute and the lack of clarity on a proper mechanism to compensate project-affected persons.
The setting up of the fund to compensate project-affected persons would be difficult to implement, he said. The provision to contribute additional funds to District Development Fund would be a discouraging factor.
Chandrajit Banerjee, Director General, CII, said the chamber welcomed the provisions in the Bill to prevent illegal mining. CII hopes that key industry concerns will be addressed in future deliberations to make the bill more appropriate, meaningful and useful for the nation, he added.
In his reaction Federation of Indian Chambers of Commerce and Industry (FICCI) Secretary General Rajiv Kumar said the proposed contribution of 26 per cent profit in the case of coal and 100 per cent equivalent of royalty in the case of other minerals to the District Mineral Development Fund would make mining unattractive for organised investors, including foreign investors.
“The current proposals of profit sharing and royalty contribution will create problems for existing mines where affected persons are not easily identifiable.
“Also, the mechanism for compensating the affected people is not clearly defined and has many limitations,” Dr. Kumar said.
The impact of this proposal was analysed by FICCI Mining Committee and it was found that the proposed mandatory contribution would raise the incidence of taxation on mining industry significantly thereby making it an unattractive sector for serious investors.
Associated Chambers of Commerce and Industry of India (Assocham) feared that land owners of other industrial projects could demand an identical structure for parting with land.
Federation of Indian Mineral Industries (FIMI) said the new measures would not attract private investment in the mining sector, which is badly needed.
Mining activity will come down and will be badly impacted. Stocks of mining companies, including Coal India Limited (CIL), declined sharply on the stock exchanges after the news of Cabinet approval to the new Bill poured in.
Commenting on the approval to the new Bill, Coal India Chairman N. C. Jha said, “It is a government decision, we will have to implement it”. Few days back, he had said that the additional cost, due to the new Act, will eventually be passed on to the consumers.
Mineral prices to go up
Coal, iron ore, zinc, bauxite and other minerals are likely to become more expensive once the new Mines Bill, approved by the Cabinet on Friday, comes into effect.
“Prices of all the minerals will go up due to this (the new Mines Bill), once enacted,” the Federation of Indian Mineral Industries' Secretary General R. K. Sharma said.
A senior NMDC official said, “It will have to be passed on to the consumers, although we are yet to calculate the impact”.
Keywords: Mines and Minerals Bill 2011