Shares of mining companies, including NMDC, Tata Steel, Vedanta, Hindustan Zinc, and MOIL, fell by up to 5% on Wednesday following a Supreme Court ruling allowing states to collect past dues on royalties for mineral-bearing land from the Centre.
How much are the mining stocks impacted?
NMDC’s shares were particularly impacted, trading over 5% lower at Rs 212 on the NSE, while Tata Steel fell by more than 4%. Vedanta’s shares dropped by 2.5%, and Hindustan Zinc, MOIL, and MMTC were also trading around 4% weaker.
Coal India, Orissa Minerals Development Company, and Ashapura Minechem also faced selling pressure as the decision was viewed as a significant setback for mining operators.
What has the Supreme Court said?
The Supreme Court’s nine-judge Constitution Bench, led by Chief Justice DY Chandrachud, rejected the Centre’s plea for the July 25 verdict to have only a prospective effect.
The court upheld the power of states to levy taxes on mineral rights and mineral-bearing land and allowed states to seek refunds of royalty payments dating back to April 1, 2005.
The court determined that payment of dues by the Centre and mining companies can be made to mineral-rich states in a staggered manner over the next 12 years. However, it directed that no penalties be imposed on these payments.
The July 25 ruling overturned a 1989 judgment which had previously granted the Centre sole authority to impose royalty on minerals and mineral-bearing land. The new decision asserts that legislative power to tax mineral rights resides with the states.
