New Delhi: The country’s major mining companies faced a tumultuous day in the stock market as their shares plummeted by up to 5%. Giants like NMDC, Tata Steel, Vedanta, Hindustan Zinc, and MOIL bore the brunt of this seismic shift. What triggered this market upheaval? The Supreme Court’s groundbreaking decision has far-reaching implications for the mining industry.
States’ Power Unleashed: A Game-Changer for Mining Companies
In a landmark verdict, the Supreme Court affirmed that states with mineral wealth hold the authority to reclaim royalty dues dating back several years from the central government. This seismic shift means that mining companies are now obligated to pay substantial sums to the states. The ruling sent shockwaves through the stock market, leaving investors and industry players reeling.
NMDC’s Precarious Position
NMDC, one of the largest mining companies, found itself in dire straits. Its shares plummeted by over 5%, reflecting the severity of the situation. But NMDC wasn’t alone—Tata Steel also suffered, with its shares dropping by more than 4%. Vedanta, Hindustan Zinc, MOIL, and MMTC followed suit, all experiencing a roughly 4% decline. Even Coal India, Orissa Minerals Development Company, and Ashapura Minechem felt the pressure.
States’ Victory: Tax and Royalty Demands
The Supreme Court’s ruling dealt a double blow to mining companies. First, it rejected the central government’s argument that the decision should only apply prospectively. Instead, the court asserted that states have the full right to levy taxes on mineral rights and mineral-bearing land. Moreover, states can demand royalty dues dating back to before April 1, 2005. The court allowed a 12-year window for mining companies and the central government to settle these payments, penalty-free.
Overturning a Decades-Old Precedent
The most significant twist? The Supreme Court overturned a 1989 decision that exclusively granted royalty-imposing powers to the central government. Now, the court unequivocally states that this authority rests with the states. As a result, mining companies face not only increased tax burdens but also the weight of old dues. Their earnings are at stake, and the stock market reflects the industry’s turmoil.
In summary, the Supreme Court’s ruling has reshaped the landscape for mining companies, leaving them grappling with financial obligations and uncertainty. Investors and industry watchers are closely monitoring the fallout from this seismic shift.
