Friday, 24 June 2011

Profit sharing won't affect mining cost'

Mining companies can make huge profit even after sharing 26 per cent of it with local communities, revealed an analysis by New Delhi-based NGO Centre for Science and Environment (CSE). 

The companies are opposing such a profit-sharing proposal in the Mines and Minerals (Development and Regulation) Bill 2010 (MMDR), which is in its draft stage. The companies think this will make mining unviable. 

The CSE analysis of six stand-alone companies, which was released here on Friday, revealed that these companies would make a healthy profit after paying tax (PAT) up to 40 per cent and sharing another 26 per cent profit. 

Releasing the report, CSE deputy director general Chandra Bhushan said, "The analysis clearly establishes how timely and necessary sharing of profit is." 

Assuming that the MMDR Bill becomes a law, the CSE analysis shows that it will not make any material difference to the profitability of the company. 

If MMDR provisions were implemented in 2010-11, the affected population in top 50 mining districts would have got Rs 9,000 crore as share of profit with a per capita profit share of Rs 38,000. The mining affected people in Orissa would have got about Rs 1,750 crore as share of profit from mining companies. The per capita profit share of the affected people in the year would have been over Rs 47,000 in the year 2010-11. 

A total population of 3.5 lakh in Angul, Sundargarh, Jajpur and Koraput were affected by mining in 2010-11. The value of minerals mined in the year was valued at Rs 15,788 crore. 

Keonjhar district produces more than one-fifth of India's ore, and contributes more than Rs 7,000 crore to then value of minerals produced in the country. However, over 50 per cent of the district's population is below poverty line. If MMDR was implemented this year, the residents in the district would have got Rs 750 crore as profit share. Every BPL household in Keonjhar would have got at least Rs 40,000 annually. 

On the other hand, in the tribal dominated Sundargarh district, mine affected people would have got a profit share of Rs 285 crore. Every directly affected person would have got Rs 45,000 annually. 

"Such profit sharing can be used to reduce poverty and at the community level, for health and education," Bhushan said. 

According to the MMDR proposal, district mineral fund, a non-profit trust, at the district level would administer the funds of such profit sharing. A governing council headed by the district magistrate would manage the fund.

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