Coal mining firms will now have to share 26 per cent of profits with local people
Important step towards inclusive growth, says CSE
Delhi, July 8, 2011: Centre for Science and Environment (CSE) has welcomed the decision taken by the Group of Ministers (GoM) on the Mines and Minerals (Development and Regulation) Bill, 2011 (MMDR bill). The GoM has decided that coal mining companies will have to share 26 per cent of their profits with the local communities, while non-coal mining companies will have to share 100 per cent of their royalty.
Sunita Narain, director general of CSE, said: “The government’s proposal to share the benefits of mining with local people is an important step ahead in building an inclusive growth model. The principle is what is more important, whether it is based on profit or royalty.”
A number of countries across the globe have incorporated the provision of benefit sharing in their mining legislations to enable local communities to benefit from mining activities in their region. For example, South Africa’s Mineral and Petroleum Resources Development Act, 2002 gives communities the opportunity to obtain a ‘preferential right’ to prospect or mine a mineral on land registered under the name of the community. In Canada, special mining regulations are in place to recognise the rights of the aboriginals.
Papua New Guinea has incorporated provisions under which the mine lease holder is to provide compensation to the landholders on whose land mining is to take place, under its Mining Act 1992. In Australia, the aboriginals have been given special rights in case mining happens on their land.
The recently released CSE report on profit sharing -- Sharing the Wealth of Minerals -- clearly shows that the Indian mining sector enjoys huge profits. The CSE analysis of companies indicates that sharing these profits will not make any material difference to the profitability of the companies. On the other hand, it will provide a much needed bulwark for the development of the country’s mining districts.
If the MMDR provision would have been implemented in the current year (2010-11), the affected population of these districts (2.5 million people) could have got more than Rs 9,000 crore as share of profits from mining companies. The per capita figure for these districts could have been Rs. 38,000 in 2010-11 as share of profit from mining companies.
Dantewada (Chhattisgarh), the most severely naxal-affected district of the country, produced minerals worth Rs 3,961 crore in 2010-11. More than 80 per cent of the population lives below poverty line (BPL), with scheduled tribes (ST) constituting about 80 per cent of the total population. If the MMDR bill would have been implemented by 2010-11, the district’s mining-affected population could have got more than Rs 400 crore as profit share. Every household in Dantewada could have been given Rs 40,000 annually.
“We support the GoM decision on profit sharing form mining. This money should be used to reduce present impoverishment and for future well being of the communities like investment in health and education,” said Chandra Bhushan, deputy director general of CSE.
CSE's strong support to set aside 26 percent of net profits from mining to be shared with local communities
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