Shares of Coal India and other mining firms tumbled on Friday after a ministerial panel approved a draft bill which would force miners to share profits with displaced local communities. If enacted the Mines and Mineral Development and Regulation would make it obligatory for coal miners to share 26 percent of their profits with locals affected by coal projects.
The bill is a bid by the Congress-led government to ease opposition to land acquisition for mining projects from locals in mineral-rich tribal districts that are beset by chronic poverty which often fuels support for Maoist rebels. Opposition to land acquisition has stalled several big-ticket projects including a $12 billion steel venture by South Korea's Posco in eastern India. Companies mining other resources such as iron, bauxite and copper will be required to pay an amount equal to the royalty tax they give state government to the original inhabitants of the mining site.
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