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Union Cabinet approves the new Mining Bill
The Union Cabinet has approved the Mines and Mineral Development and Regulation
(MMDR) Bill, 2011, making it mandatory for coal miners to share 26% of their profit after
tax with project-affected people. For companies mining other minerals (such as limestone,
iron ore and bauxite), the bill proposes that the companies should pay an amount
equivalent to 100% of the royalty to the local population of the project site. Furthermore,
the new bill obligates mining firms to pay a 10% cess to state governments and 2.5% to the
centre on the total royalty paid. As per our estimates, the EPS of mining companies is
expected to be lower by 8–13%, while for Coal India the EPS could potentially decline by
17% (For details refer to our report “Mining Bill – Impact Analysis” dated July 8, 2011). The
bill is expected to be taken up for approval by the parliament in the winter session.
Meanwhile, we maintain our estimates and rating for the stocks under coverage until the
bill is approved by the parliament.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Union Cabinet approves the new Mining Bill
The Union Cabinet has approved the Mines and Mineral Development and Regulation
(MMDR) Bill, 2011, making it mandatory for coal miners to share 26% of their profit after
tax with project-affected people. For companies mining other minerals (such as limestone,
iron ore and bauxite), the bill proposes that the companies should pay an amount
equivalent to 100% of the royalty to the local population of the project site. Furthermore,
the new bill obligates mining firms to pay a 10% cess to state governments and 2.5% to the
centre on the total royalty paid. As per our estimates, the EPS of mining companies is
expected to be lower by 8–13%, while for Coal India the EPS could potentially decline by
17% (For details refer to our report “Mining Bill – Impact Analysis” dated July 8, 2011). The
bill is expected to be taken up for approval by the parliament in the winter session.
Meanwhile, we maintain our estimates and rating for the stocks under coverage until the
bill is approved by the parliament.
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