Here’s What Brokerages Said About Finance Minister’s Reforms For Mining Sector

Brokerages expect the reforms announced by Finance Minister Nirmala Sitharaman for the mining sector as part of measures to revive the Indian economy to benefit aluminium companies and iron ore and limestone mine operators.

The reforms include:

• Composite exploration-mining-production regime to be introduced.
• 500 mining blocks will be offered through open transparent auction process.
• To introduce joint auction of bauxite and coal mineral blocks to enhance aluminium industry’s competitiveness.
• To remove distinction between captive and non-captive mines.
• Rationalisation of stamp duty payable at the time of award of mining leases.

Removal of the distinction between captive and non-captive mines, the brokerages said, would be a great opportunity for captive miners—potentially benefiting iron ore or limestone mine operators.

Companies like Steel Authority of India Ltd. and Tata Steel Ltd. are integrated players as they have iron ore reserves. Currently, lime stone reserves—a key raw material for cement makers—are either captive or auctioned.

Here’s what the brokerages said:

Morgan Stanley

• Sale in open market by captive miners could be opportunistic.
• Players with captive iron ore mines should benefit.
• Cement players with excessive limestone reserves would become a pricier buy.

Edelweiss Securities

• Measures pertaining to mineral sector are long-term in nature.
• No distinction between captive and non-captive mines to lead to aggressive bidding for iron ore mines in Odisha.
• Joint auction of bauxite and coal mines is interesting. This will reduce cost amid the given the market share mix of aluminium players.
• Focus on metals like copper is missing.

IDBI Capital

• Steps are positive for metal and mineral sector
• Joint auction of coal and bauxite mines to help aluminium industry reduce cost.