A ministerial panel approved a draft bill for the mining sector, which makes it mandatory for coal miners to share 26% of their profits with project-affected people.
The draft Mines and Mineral Development and Regulation (MMDR) Bill, 2011, also proposes companies mining other resources to pay 100% of the royalty on their production to the original inhabitants of the project site.
The total burden on miners on account of profit and royalty has been estimated at around Rs 11,000 crore per annum.
Marketmen said the downfall in mining sector stocks was a reaction to the approval for the draft bill, as the proposals of the Bill (profit and royalty sharing) would act as a disincentive for the mining sector and would also deter foreign investment in the sector.
Following the news, shares of Coal India and other mining companies tumbled in morning trade on the Bombay Stock Exchange today.
Coal India fell to a low of Rs 361 in opening trade on the BSE, but later regained some lost ground and was trading at Rs 374.10, down 5.11%.
Stocks of other mining companies were also under pressure, with Sesa Goa trading down 4.61% at Rs 280.55, Ashapura Minechem at Rs 21.60 (down 3.57%), Gujarat Mineral Development Corporation at Rs 159.25 (down 1.97%) and NMDC at Rs 262 (down 1.09%).
