Miners refuse to share profits with locals

The miners are also against Sonia Gandhi's 'annuity' proposal for land acquisition.

Apex miners’ body FIMI today said it is opposed to the new mining bill,which seeks that miners share 26 per cent profit with the people affected by the projects,and cautioned that if enacted it would choke investments and doom the industry.

It has also opposed annuity model of compensation,which has found favour with UPA Chairperson Sonia Gandhi who raised concerns last week over land acquisition norms.

Instead,FIMI has called for royalty linked contribution for the local people who are affected by mining.

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“Foreign investment of USD 270 million (over Rs 1,200 crore) in the sector have already gone waste and 26 per cent profit sharing clause with the affected will prove a further deterrent”,Federation of Indian Minerals Industries (FIMI) President Siddarth Rungta said addressing the media.

A ministerial panel,headed by Finance Minister Pranab Mukherjee,will meet on September 17 to discuss the bill.

Meanwhile,Gandhi has raised concerns over land acquisition norms for industrial purposes and supported an annuity model followed in Haryana,where farmers are not only offered lucrative compensation but are also provided annuity for 33 years.

However,FIMI Secretary General RK Sharma said,”We are opposed to annuity model. We have registered a strong protest with the government this morning too. The very concept is wrong… If you want to share profit,invest in shares of the company.”

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Sharma added,”Royalty linked contribution by the mining companies is the best way to deliver justice to people.”

He said that up to 26 per cent of the royalty,over and above what miners give to states,could be levied for local development through a committee. “Royalty rates can be changed after three to five years”,Sharma said.

The Mines Ministry,on the other hand,has proposed that a fund — District Mineral Foundation — be created and the beneficiaries be paid out the 26 per cent net profit of the mining companies from it.

The ministry plans to introduce the Mines and Mineral Development and Regulation Act (MMDR Act) in the winter session of Parliament to replace the MMDR Act,1957.

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The draft bill,which has undergone several changes would come up for the review by a Group of Ministers (GoM) this week. The GoM,constituted in June to examine the Bill,met twice.

“Each revision has made the bill worse,” FIMI officials said. Besides,FIMI said that although the private sector has made huge investments for exploration in the mineral rich states since 1996,the state governments have already started reserving the chunks of blocks for their PSUs,based on a preferential clause in the draft bill.

It said,”The states are asking private parties to enter into joint venture with them with a free sweat equity. This has to be seen against Central government’s policy,which is to dilute its holding in its PSUs.”

Further,FIMI said that most of the PSUs have no capacity and expertise to explore to develop the mines,and contracts for mining are awarded to private parties on commission basis,which leads to unscientific mining by the contractors.

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“This defeats the very objective of reservation of the area for PSUs,” it added,pointing out that mining on commission basis would lead to illegal mining.

The new Bill seeks to expedite grant of mineral concessions in a transparent manner,besides attracting investments in the sector.

In the earlier draft,the provision was made for companies to either share 26 per cent equity or profits with the locals and tribals.

However,the 26 per cent equity sharing proviso was opposed fiercely by the industry,prompting the Centre to dilute it.