New Delhi, September 30
The Cabinet today cleared the Mines and Minerals (Development and Regulation) Bill, 2011, aiming to regulate mining activities in the country through profit-sharing and bidding of mining rights.

Being seen as major move toward reform in the sector that is rife with illegal activities, the new mining Bill calls for coal miners to share a maximum 26 per cent of their post-tax profit for the welfare of affected people and other miners an amount equivalent to royalties.

The Bill also envisages improving the legislative environment in order to attract investment and technology in the mining sector. The Bill stipulates imposition of cess - 10 per cent to state governments and 2.5 per cent to the Centre on the total royalty paid- besides punitive provisions to prevent illegal mining.

The announcement saw mixed response from the industry.

Shares of state-run coal giant Coal India slumped 4.73 per cent to end as the top loser in the Sensex pack while state-run iron ore miners NMDC fell 0.09 per cent. Gujarat Mineral Development Corporation lost 5.56 per cent while private sector iron ore miner Sesa Goa gained 3.85 per cent.

Replacing the existing Act of 1957 the new Bill will have special provisions for allowing mining of small deposits in cluster, where cooperatives can apply. Under the Act the states can set up a minimum floor price for competitive bidding and call for applications in notified areas of known mineralisation. States can grant direct mining concessions through bidding based on a prospecting report and feasibility study in the notified areas where data of minerals are adequate for the purpose, according to the Bill. 

Miners to share 26 per cent of their net profits with the people affected by coal projects

Bill provides for a regulatory authority to govern the sector

Envisages improving legislative environment in order to attract investment and technology

Allows state governments to set up a minimum floor price for competitive bidding