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The Centre cleared a proposal to amend the Mines & Minerals (Development & Regulation) Act to allow the transfer of captive mining leases not granted through auction.
This will allow mergers and acquisitions of companies and pave way for deals in the cement sector that were stuck earlier, because of the absence of this provision.
Deals such as those between Lafarge and Birla Cement and the Jaypee Group and UltraTech Cement were held up, as transfer of mining leases was permitted only in case of auctioned mines. “M&A activity will now flow smoothly than before” says Jatin Damania from Kotak Securities. In the stressed steel sector, however, most steel companies do not own captive mines. It’s the big ones such as Tata Steel and SAIL that own captive iron ore mines. Therefore, the absence of a provision allowing transfer of captive mines until now, has not posed a problem.
Majority of the smaller companies do not have captive mines, and there will probably be no immediate impact of this amendment.
Nonetheless, according to Damania, this is a positive move for the mining and metals companies in the long-run.
The stock of mining major Vedanta and UltraTech Cement was marginally up (less than 1 per cent), while Hindalco Industries and Birla Corporation ended the day 3 per cent up.
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