Stocks

New bill drags mining stocks

Vishwanath Kulkarni New Delhi 12 Dec | Updated on December 12, 2011

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Major metal and mining stocks lost further ground in a weak market on Monday to hit yearly lows after the new mining bill, which proposes to bring in the concept of profit and royalty sharing, was introduced in Lok Sabha by the Government.

The Steel Authority of India Ltd (SAIL) scrip touched a 52 week low of Rs 77.70 before recovering to close at Rs 78.50 on the BSE, a loss of 5.65 per cent over previous close. NMDC also hit a yearly low of Rs 168 before recovering to close at Rs 169.15, a loss of 4.54 per cent.

Private player Sterlite Industries also hit a yearly low of Rs 98 before closing at Rs 98.20, a loss of 3.16 per cent. Hindalco Industries and JSW Steel lost the maximum in percentage terms to shed over 6 per cent on the BSE. Hindalco scrip ended 6.37 per cent to close at Rs 123.55, while the JSW Scrip ended 6.07 per cent lower at Rs 551.85.

As per the new mining bill, coal and lignite companies would have to share 26 per cent of their previous year’s profits for the welfare of project affected people, while companies mining other major minerals like iron ore and bauxite will have to pay an amount equivalent to their royalty for the same. The industry estimates an impact of over Rs 10,000 crore because of these new provisions. The sell-off in these stocks dragged down the BSE Metal Index by 4.14 per cent, while the benchmark Sensex ended 2.12 per cent lower.

Coal India lost 3.85 per cent to settle at Rs 304.45, while Neyveli Lignite lost 2.59 per cent to close at Rs 71.35 on the BSE. Other major players like Sesa Goa lost 1.94 per cent, while the Tata Steel scrip shed 3.14 per cent to close at Rs 385.75 on the BSE. The Hindustan Zinc scrip shed 2.18 per cent while that of Gujarat Mineral Development Corporation and Hindustan Copper plunged over 3 per cent each. Shares of NALCO and MOIL shed less than 0.5 per cent each.

Published on December 12, 2011

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