Integrated steelmakers may have to split mining, steelmaking books
23 September 2010
Even as the contentious issue of sharing 26-per cent profit from mining operations continues to be a subject of heated debates, the government yesterday said integrated steelmakers would be told to demarcate their mining and steel operations and maintain separate accounts to allow stand-alone profit from mining to be ascertained.
Integrated steelmakers led by state-run Steel Authority of India Ltd (SAIL) remain opposed to the profit sharing clause of the new mining bill calling it impractical.
Though SAIL and Tata Steel, the two largest steelmakers in the country, operate fully captive iron ore mines, the companies do not maintain separate financial accounts for the operations.
According to P K Misra, secretary, ministry of steel, the companies would have to set up separate entities for mining and steel making. He added that people settled in the areas around the mines would become more positive towards mining if they are given a stake in mining activities.
Addressing a FICCI seminar Misra said any impact on profitability would only be for the short term.
Stand-alone mining operations are far more profitable in the country than steelmaking even though mining remains one of the more heavily taxed industries.