Draft Mining Bill Cleared, Firms to Share Profits with Locals
New Delhi, Sep 30 (PTI): The government today approved a landmark draft mines bill which provides for miners to share 26 per cent of their net profits for the people affected by the coal projects, while the burden on the non-coal miners will be amount equivalent to royalty.
The draft bill, approved by the Union Cabinet, also addresses the burning issue of illegal mining, as it provides for a regulatory authority to govern the sector. "It will have powers to investigate and prosecute the offenders," Mines Secretary S Vijay Kumar said after the Cabinet meeting. He said the authority would also be empowered to look into the cases of organised illegal mining.
Despite an outrage against illegal mining in Karnataka and Goa, the menace remains largely unchecked. As many as 82,000 cases were reported in 2010 and about 25,000 cases in first three months of this year, government data shows.
The Mines and Minerals (Development and Regulation) Bill, 2011 will replace the 54-year-old legislation governing the sector. It was felt that the existing laws have not provided a fair deal to those affected by the mining projects and the leases were not given in transparent manners.
Additional outgo for the non-coal miners would be around Rs 4,500 crore, according Mines Minister Dinsha Patel. As per the industry estimates, Coal India alone may have shell out about Rs 1,000 crore a year for the proposed fund. Stocks of metal and mining firms were hammered on the bourses. While Coal India lost by five per cent, SAIL and Tata Steel were down by about four per cent.
"It (new measures) will not attract private investment in the mining sector, which is badly needed... The mining activity will come down," Industry body FIMI said.
Mines Minister Dinsha Patel said that the new Bill will be tabled in Parliament in the Winter session.
However, Orissa Chief Minister Naveen Patnaik dubbed Cabinet's approval to the new Bill as "too little and too late", and said it would not help poor people living in mineral rich areas.
He added that "we had asked much more than what has been announced today".
Earlier this month, Patnaik, in a letter to the Prime Minister, had demanded 50 per cent share on the the super normal profit made by the private mine owners and imposition of a mineral resource tax on iron ore.
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. According to the Mines Minister, the outgo, including royalty payments, of the miners would increase to Rs 8,500 crore after the implementation of the Bill and the additional money will be utilised for local population and area development.
The money will be deposited in a mineral development fund and will be managed through a district level mineral foundation.
As per the Bill, the states may call for applications in mineralised areas for prospecting and grant direct mining concessions through auction in such areas.
"The bill allows state governments to set up a minimum floor price for competitive bidding and has special provisions for allowing mining of small deposits in cluster, where cooperatives can apply," Patel said.
In case where mineralisation is not proved, the state governments can allot concessions on 'first come first serve' basis. The Bill has also enhanced penalties for violation of provisions that include debarment of persons or firms convicted of illegal mining for future grants and termination of all mineral concessions held by them.
It also envisages establishment of special courts at the state level for fast disposal of the cases of illegal mining.
Apart from compensating project-affected people, the new Bill also obligates mining firms to pay 10 per cent cess to state governments and 2.5 per cent to the Centre on the total royalty paid.