Coal-Rich Indian State to Pass Mining Tax After Court Ruling

(Bloomberg) -- The Indian state of Jharkhand has passed a bill imposing mining taxes, according to people familiar with the matter, a move that's set to inflate the prices of minerals from coal to bauxite. 

The state assembly has approved the Jharkhand Mineral Bearing Land Cess Bill and it now awaits the assent of the governor, the people said, asking not to be named as the deliberations aren't yet public. A sum of 100 rupees ($1.19) a ton will be levied on coal and iron ore production once it's passed, they said.

Jharkhand in India's northeast is one of the country's top coal-producing states and also has major reserves of iron ore, bauxite and manganese. The bill follows a Supreme Court ruling that gave Indian states the right to impose levies on mining, in addition to collecting existing royalties. Local governments will also be allowed to recover any overdue payments from April 2026.

Jharkhand government's public relations department didn't respond to calls or an email seeking comment.

“India's mining industry is already saddled with very high taxation and any new taxes could burden the industry and risk investments,” said B.K. Bhatia, additional secretary general at Federation of Indian Mineral Industries. The court ruling has given “unbridled powers to states” and with such large expenses looming “companies will be looking to prioritize arrear payments instead of making new investments,” he said. 

FIMI, an industry lobby group, estimated the historic arrears could be as high as 2 trillion rupees for miners in states including Odisha, Jharkhand and Karnataka. States are yet to release an official figure.  

In addition to coal and iron ore, Jharkhand will impose taxes of 70 rupees a ton on bauxite, and 50 rupees on limestone and manganese, the people said. For other minerals, the miners will pay a sum equal to 50% of the royalty levied on them by the state government, they said. 

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