The decision of the Group of Ministers (GoM) to force mining companies to share 26 per cent of their profits with local and project affected people hasn’t gone down well with the industry.
Union Mines Minister B K Handique had said the Bill in this regard had been approved by the GoM.
Hemant Nerurkar, managing director, Tata Steel, said: “I don’t think that is the way forward. Look at the world: no other country has enacted a law like this. There are royalties which in our case (India) is high, compared to those countries.”
Malay Mukherjee, chief executive officer, Essar Steel, agreed and added, “The implementation of this (would be) very tough.” Mukherjee said the value of every mineral is different and the profit sharing will vary on a mine-to-mine basis.
Rana Som, chairman-cum-managing director, NMDC Ltd, India’s largest and government-owned iron ore mining firm, declined to comment. Som said, “No reaction.”
An official from another public sector mining company, on condition of anonymity, said, “It’s a noble thought but there is so much complexity involved in its implementation, I have my doubt if such a lofty idea would we put into action.”
Also Read
S B S Chauhan, advisor, Federation of Indian Mineral Industries, said, “This is a death knell for the mining industry. I don’t think any foreign company would like to invest in the exploration business in India because of this profit sharing clause. More, this will defeat the National Mineral Policy of 2008, which primarily talks about attracting private participation in exploration, etc. Who will invest now?”
He said Indian mining is heavily taxed and now, with the royalty and profit sharing, miners will find it very difficult to survive.
Kaushik Chatterjee, group chief financial officer, Tata Steel, said: “You might talk about 26 per cent profit sharing: How will you translate that into development for the people? The point is that the lack of development has not been due to a lack of funds. How do you frame the institutional framework, so that the money actually goes towards development of infrastructure of that place and that model? One has to think properly.”