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Govt firm on mining payoffs

business Updated: Sep 16, 2010 00:52 IST
HT Correspondent
HT Correspondent
Hindustan Times
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It seems that tribals have for the nonce gained an upper hand over industrialists.

There has been widespread opposition to the proposal that domestic mining companies share 26 per cent of their profit from mining operations with the local host population. However, the government on Wednesday resolutely refused to drop the clause or even reconsider it in its present form.

The clause is a part of the draft Mines and Minerals Development and Regulation (MMDR) Bill that will replace the 53-year-old MMDR Act, and has been in the works for over four years. In the backdrop are the rise of Maoist violence — mostly in tribal areas — and a seething tribal backlash that has seen many big projects — Posco, ArcelorMittal and Vedanta to name a few — getting stalled.

Domestic mining firms have been protesting against the proposed levy citing the already high level of taxation in mining, adding that it will scare away investors from the sector. Mines minister B.K. Handique however said miners needed to take a holistic view, and there would be no reduction in the extent of profit-sharing.

"Most mining areas are remote and backward and sharing profits puts the purchasing power in the hands of the hitherto deprived section of the population," Handique said. "I know there are many in the mining community who too feel that sharing of profits gives a better assurance of being allowed to mine sustainably."

Handique said a Group of Ministers on mining will take up the draft bill on Friday, and it will be presented to the Union cabinet for approval. The bill will be tabled in Parliament in the winter session.

Given the number of stake holders and the opposition from the private sector, the bill may well fall at that hurdle.

"Any step that reaches out to the people and uplifts them is welcome but whether it will be implemented well is the question," said D.B. Sundara Raman, general manager (Ore Mines & Quarries), Tata Steel.

The policy of sharing profit with tribal populace has helped quell resistance in South Africa and Namibia. The industry is however unconvinced.

"Twenty-six per cent equity or annuity from profit will scare away exploration companies (from venturing into tribal areas)," said Siddharth Rungta, president, Federation of Indian Mineral Industries. "No significant investment has come in the mining sector (in S Africa and Namibia)... there is a flight of private capital from these two countries."