Shares of state-run NMDC Ltd. fell as much as 5% on Wednesday, December 18 after sources with knowledge of the matter told CNBC-TV18 that the Karnataka state government is looking to increase the duty on iron ore mining.

Sources further said that the draft in relation to the increase in iron ore duty is likely to have circulated a few days ago and that the state government is likely to take the decision with regards to iron ore duty soon.

Karnataka is an important state for NMDC as it contributes to nearly 35% of the overall mix for the company.

The Karnataka government is looking to collect over ₹10,000 crore in Iron Ore duty this year.

The state cabinet last week had approved the Karnataka (Mineral Rights & Bearing Land) tax bill.

The Supreme Court earlier, had already approved states to collect mining taxes retrospectively from 2005. After that Supreme Court verdict in the month of August, industry players had said that this will have very large financial implications as the arrears may end up being to the tune of ₹1.5 lakh crore to ₹2 lakh crore.

Shares of NMDC are trading 4.8% lower at ₹216.6. The stock is on the verge of giving up gains for the year, currently trading only 2.5% higher year-to-date.