Government eyeing a modest transfer fee for M&As in mining

Labourers carry coal at a stockyard of an underground coal mine in the Mahanadi coal fields at Dera, near Talcher town in the eastern Indian state of Orissa March 28, 2012. India sits on the world's fifth-largest coal reserves, and produces the most after China and the United States. Picture taken March 28, 2012. To match INDIA-COAL/ REUTERS/Rupak De Chowdhuri (INDIA - Tags: BUSINESS ENERGY EMPLOYMENT)

To spur mergers and acquisitions in the stressed minerals and commodities sectors, the government is likely to keep the transfer fee or additional royalties to be paid by an acquirer for the remaining period of a mining lease at a ‘reasonable’ level, a top mines ministry official said.

The transfer fee rate is likely to be notified over the next fortnight, after the President’s assent is secured for the new Mining and Mineral Development and Regulation Law passed by Parliament.

Fresh changes The fresh changes to the 1958 law, that was amended in 2015 as well, became imperative as merger and acquisition (M&A) transactions worth thousands of crores of rupees were held up as the 2015 law had no provisions to enable transfer of captive mines allotted in the past.“The mining and commodities industry is already in deep trouble. The (transfer fee) rates would be kept reasonable to that extent,” a senior mines ministry official told The Hindu .

Published - May 17, 2016 11:54 pm IST