Plan for royalty rate hike upsets iron ore miners
Updated: Apr 25, 2013 05:16:58pm
New Delhi, Apr 25 (KNN) Iron ore miners are opposing the Centre’s proposal to increase royalty rate for iron ore by 5 per cent, while the Odisha Government is pitching for additional hike.
Currently, royalty is charged at the rate of 10 per cent of sale price on ad-valorem basis (based on its value) from the iron ore miners. The Mines Ministry is considering a proposal to increase it to 15 per cent and a study group on revision of rates of royalty has been constituted by the ministry, according to an official notification.
The last increase in royalty rate of iron ore was made in August 2009 and according to the provisions of the Mines and Mineral (Development and Regulation) Act, 1957, the rates can be revised after three years, if necessary.
Media report quoting the Goa Mineral Ore Exporters' Association (GMOEA) said that any hike in royalty rate for iron ore would "deter the mining of lower grade ore which is detrimental to the conservation of mineral."
GMOEA - an industry body of miners in Goa is concerned over the impact of hike on the industry, particularly on producers of lower grades of iron ore and listed out several issues concerning the miners.
According to it, the new mining bill has already proposed payment of an amount equivalent to the royalty paid by the miners to the District Mineral Foundation. Besides, the royalty payable on iron ore in the country, at 10 per cent currently, is much higher than other mineral-rich nations, it added.
"This would made substantial portion of mining in the country unviable," the GMOEA said.
As per the industry body from Goa, Australia charges between 5 and 7.5 per cent, while Indonesian rate is at 3 per cent. Besides, China's rate is at 2 per cent, while in Brazil, it is less than 3 per cent. Other iron ore producing countries like Canada, South Africa and Chile do not levy any royalty.
It also claimed that iron ore industry in the country is highest taxed sector and over 50 per cent of its total sales realisation is paid back to the state governments and the Centre through various taxes.
GMOEA said that outlook for the sector is negative currently and the prices of iron ore are forecasted to decline due to reduction in demand from China.
The Goan iron ore's quality ranges between 46 per cent and 59 per cent. Most of the ore from the state is exported as it can be beneficiated to a limited extent and there are limited buyers of the mineral in the country.
Meanwhile, the Odisha government has asked for more hike. "The Government of India has notionally agreed to raise royalty rate on iron ore from 10 per cent to 15 per cent. But this hike is not acceptable to us. We believe that the royalty rate of 15 per cent is not enough. The Centre should fix the royalty rate after proper examination of profits made by miners. Earlier, we had brought to the notice of the Central government regarding the super normal profits earned from mining activities," media report quoting Director (mines) Deepak Mohanty said.
Further, he added, "We are not demanding in percentage terms. Let the Central government take a call on royalty hike after factoring in super normal profits earned by the mine owners."
Mining revenue, the single biggest contributor to the state's non-tax revenue segment, stood at Rs 5,352.94 crore in 2012-13 as against a target of Rs 5,700 crore. In 2011-12, the mining revenue collection was Rs 4,586.64 crore. (KNN)
Currently, royalty is charged at the rate of 10 per cent of sale price on ad-valorem basis (based on its value) from the iron ore miners. The Mines Ministry is considering a proposal to increase it to 15 per cent and a study group on revision of rates of royalty has been constituted by the ministry, according to an official notification.
The last increase in royalty rate of iron ore was made in August 2009 and according to the provisions of the Mines and Mineral (Development and Regulation) Act, 1957, the rates can be revised after three years, if necessary.
Media report quoting the Goa Mineral Ore Exporters' Association (GMOEA) said that any hike in royalty rate for iron ore would "deter the mining of lower grade ore which is detrimental to the conservation of mineral."
GMOEA - an industry body of miners in Goa is concerned over the impact of hike on the industry, particularly on producers of lower grades of iron ore and listed out several issues concerning the miners.
According to it, the new mining bill has already proposed payment of an amount equivalent to the royalty paid by the miners to the District Mineral Foundation. Besides, the royalty payable on iron ore in the country, at 10 per cent currently, is much higher than other mineral-rich nations, it added.
"This would made substantial portion of mining in the country unviable," the GMOEA said.
As per the industry body from Goa, Australia charges between 5 and 7.5 per cent, while Indonesian rate is at 3 per cent. Besides, China's rate is at 2 per cent, while in Brazil, it is less than 3 per cent. Other iron ore producing countries like Canada, South Africa and Chile do not levy any royalty.
It also claimed that iron ore industry in the country is highest taxed sector and over 50 per cent of its total sales realisation is paid back to the state governments and the Centre through various taxes.
GMOEA said that outlook for the sector is negative currently and the prices of iron ore are forecasted to decline due to reduction in demand from China.
The Goan iron ore's quality ranges between 46 per cent and 59 per cent. Most of the ore from the state is exported as it can be beneficiated to a limited extent and there are limited buyers of the mineral in the country.
Meanwhile, the Odisha government has asked for more hike. "The Government of India has notionally agreed to raise royalty rate on iron ore from 10 per cent to 15 per cent. But this hike is not acceptable to us. We believe that the royalty rate of 15 per cent is not enough. The Centre should fix the royalty rate after proper examination of profits made by miners. Earlier, we had brought to the notice of the Central government regarding the super normal profits earned from mining activities," media report quoting Director (mines) Deepak Mohanty said.
Further, he added, "We are not demanding in percentage terms. Let the Central government take a call on royalty hike after factoring in super normal profits earned by the mine owners."
Mining revenue, the single biggest contributor to the state's non-tax revenue segment, stood at Rs 5,352.94 crore in 2012-13 as against a target of Rs 5,700 crore. In 2011-12, the mining revenue collection was Rs 4,586.64 crore. (KNN)
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