New mines law to come before Cabinet for approval

The draft MMDR bill 2011 -- which provides 26 per cent profit-sharing with displaced people by coal mining companies and an amount equivalent to royalty paid to the state government -- has already been cleared by a ministerial panel, headed by Finance Minister Pranab Mukherjee, on July 7.

"The said GoM (Group of Ministers) held five rounds of detailed discussions and on July 7 has recommended the draft Mines and Mineral (Development and Regulation) Bill, 2011 to be placed before the Cabinet. The Bill is proposed to be introduced in Parliament... (it) is in the process of Cabinet approval," Mines Minister Dinsha Patel informed Rajya Sabha.

In a written reply to the Upper House, Patel, however, did not share the details of the provisions in the new bill, saying, "The details of provisions as they stand in the draft MMDR Bill at present are by their nature secret since the draft MMDR Bill is in the process of Cabinet approval."

The legislation has been prepared after taking into account the views of various stakeholders, including mining companies. The draft law was earlier referred to a GoM set up by the government on June 14 last year to iron out differences among ministries over 26 per cent profit-sharing formula. The provision created a lot of furore among the industry with major players, including mining body Federation of Indian Mineral Industries, opposing it.

After five rounds of meeting, the GoM has finalised its recommendations that includes 26 per cent profit sharing by coal companies, as per minutes of the GoM.

The total burden on miners by shelling out profit and royalty would be around Rs 11,000 crore, as per sources. Apart from compensating the displaced people through profit-sharing and royalty, the mining firms will have to bear a combined cess up to 12.5 per cent on the royalty paid to states and the Centre, as per the new mining bill.

The firms will be required to pay up to 10 per cent cess to state governments on the royalty payment, while 2.5 per cent levy will be charged by the Centre as cess, said sources.