Metal Stocks Slump: NMDC Tanks 6% After SC Mining Royalty Verdict

New Delhi, Aug 14 (PTI) Shares of metal firms took a beating on Wednesday, with NMDC slumping 6 per cent, after the Supreme Court verdict on the mining royalty case.

The stock of NMDC slumped 6.08 per cent, Hindustan Copper tumbled 4.25 per cent, MOIL dropped 3.47 per cent, Coal India fell 3.18 per cent, National Aluminium Company declined 2.71 per cent, SAIL went lower by 2.26 per cent, Gujarat Mineral Development Corporation (1.39 per cent), Tata Steel (1.81 per cent) and Vedanta (0.63 per cent) on the BSE.

The BSE metal index dropped 1.51 per cent to 30,312.05.

In a major victory for mineral-rich states, the Supreme Court on Wednesday allowed them to seek dues from April 1, 2005, on royalty and tax on mineral rights and mineral-bearing land from the Centre in a staggered period of 12 years.

A nine-judge Constitution bench headed by Chief Justice of India DY Chandrachud said the argument for prospective effect of July 25 is rejected.

According to Miners' body FIMI, the Indian mining sector is already saddled with the highest taxation in the world.

"The Supreme Court's recent ruling allowing states to recover past tax dues from April 2005, without any interest, is negative for the entire metal sector," said Vikram Kasat, Head-Advisory, PL Capital - Prabhudas Lilladher.

The Centre has opposed the demand of states for a refund of royalty levied on mines and minerals since 1989, saying it will impact the citizens and the PSUs will have to empty their coffers by Rs 70,000 crore according to initial estimates.

The Supreme Court verdict on the mining royalty case will give a further jolt to the Indian mining industry and have very large financial implications, as arrears may work out to the tune of more than Rs 1.5 lakh crore to Rs 2 lakh crore, industry players said on Wednesday.

According to Amitava Mukherjee, Chairman and Managing Director of NMDC, "it will impact the mining industry at large and we are evaluating to what extent it would be affecting us. To comment in detail we are assessing both short term and long term implications."

Meanwhile, Coal India in a filing to the BSE said, "...CIL is going through the above order and based on the above, the company will assess the probable financial impact thereof, which will be disclosed in due course of time.