CIL shares dip 8.2% on draft mining bill
The BSE benchmark Sensex on Friday rose to a nine week high of 19,131.70, but later tripped by more than 220 points as investors sold bluechips, especially metal and mining stocks, on worries that a new mining draft would hurt corporate earnings, besides a likely cabinet shuffle next week.business Updated: Jul 08, 2011 20:52 IST
Coal India Ltd (CIL) share price fell by 8.2% on Friday to close at R362, thus slipping two positions in a day to become the fourth largest company by market capitalisation as ONGC and TCS occupied the second and third spot respectively. Reliance Industries holds the top position.
Sesa Goa also suffered as its share price fell by 4.2%.
The losses were driven by the draft mining that was approved on Thursday by a group of ministers and inclusion of two contentious clauses in it — one that requires coal companies to share 26% of their profits for developing the area where they operate and another that stipulates all other mining firms to pay an amount equal to what they pay to the government as royalty, for the same purpose.
The world's largest coal producing company Coal India Ltd would have to payt Rs 2,848.5 crore under the formula to the local population.
Sesa Goa, India’s largest iron ore exporter, would have to pay Rs 230 crore as royalty over its profit of Rs 4,284 crore.