Govt notifies transfer charges for non-auctioned captive mines

The government on Wednesday notified the charges for sale of non-auctioned captive mines, a move that will not only boost mergers and acquisitions in the space but will also unlock billions of dollars worth of assets.

“Whenever royalty is payable in terms of Second Schedule to the Act, the transferee shall in addition to royalty, pay to the State Government as transfer charges...,” the notification said adding: “Transfer charges payable by the transferee shall be an amount equal to 80 per cent of royalty.” 

During the Budget Session that ended in April, the Mines and Minerals (Development and Regulation) Amendment Bill, 2016 was passed, which allows transfer of captive mines without auction and will enable banks and financial institutions to sell stressed assets to recover debts.

The Bill got President’s nod last month and was with the Mines Ministry, which was to fix the transfer charges that were to be paid by the acquirer of the mines to the state government.

The notification has been issued on Wednesday. Speaking to reporters earlier on the sidelines of a Ficci event here, Mines Secretary Balvinder Kumar said: “Keeping in view the government’s commitment of enhancing the ease of doing business, and particularly for the cement sector, we will notify the charges today.”

He added that this step will not only boost the morale of the industry but will also give a spurt to activity in the mining sector. 

The move will not only spur merger and acquisitions (M&A) in the sector, but will also help in checking the stressed and non-performing assets of banks by allowing them to liquidate assets where a firm or its captive mining lease is mortgaged.

It will allow M&As worth billions of dollars in the domestic market, especially in the Cement sector where several such deals are stuck.