A new Mining Bill stipulating that miners share benefits with project affected people was cleared by the Union Cabinet on Friday. The proposed Mines and Minerals (Regulation and Development) Bill, 2011, when implemented, would impose an additional burden of around Rs 10,000 crore annually on the mineral industry.

Coal companies will have to share 26 per cent of their net profits with the project affected people. Miners of other major minerals such as iron ore and bauxite have to shell out an amount equal to the royalty paid to the States.

“This will be credited to the proposed District Level Mineral Foundation that would be utilised for the welfare of the project affected people,” the Mines Minister, Mr Dinsha Patel told newspersons after the Cabinet meet.

The mining industry slammed the Government's move on benefit sharing. Top officials of both Coal India Ltd and NMDC felt that the Bill, coupled with the forthcoming Land Acquisition and Rehabilitation Bill, if not moderated, will make mining completely unviable in the country

The Bill aims at attracting investment and technology in the mining sector. Besides, it envisages sustainable and scientific mining, better regulation and has punitive provisions to prevent illegal mining. It wants special courts at the State level for speedier disposal of cases relating to illegal mining.

States, which own the mineral resources, can invite companies for prospecting. They can introduce the competitive bidding process for granting concessions and set their own minimum floor price. Under the current law, mineral concessions are granted by States on a first-come-first-served basis. The Mines Ministry estimates royalty collection by States at over Rs 4,000 crore.

The Bill will have a special provision for mining of small mineral deposits in clusters, where co-operatives can apply. It stipulates levy of cess — 10 per cent by the State Government and 2.5 per cent by the Centre on the total royalty paid — for setting up Mineral Funds at national and State levels for capacity creation.

The Bill is likely to be introduced in the winter session of Parliament.

Asked if mining companies will have to invest in developing ancillary units for job generation, the Mines Secretary, Mr S. Vijay Kumar, said, “whether or not to do value addition is an entrepreneur's decision. However, the States are entitled to optimise their resources.” He also said profit sharing would not lead to rise in coal prices.

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