Shares of Coal India and other mining companies tumbled in morning trade on the Bombay Stock Exchange today after a ministerial panel approved a draft Bill for the mining sector.
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 per cent.
The draft Mines and Mineral Development and Regulation (MMDR) Bill, 2011, proposes to make it mandatory for coal miners to share 26 per cent of their profits with project-affected people, while companies mining other resources will be required to pay 100 per cent of the royalty on their production to the original inhabitants of the project site.
Stocks of other mining companies were also under pressure with Sesa Goa trading down 4.61 per cent at Rs 280.55, Ashapura Minechem at Rs 21.60 (down 3.57 per cent), Gujarat Mineral Development Corporation at Rs 159.25 (down 1.97 per cent) and NMDC at Rs 262 (down 1.09 per cent).
The total burden on miners on account of profit and royalty has been estimated at around Rs 11,000 crore a year.
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.