The decision of the Goa cabinet to impose 15% royalty on iron ore miners for renewing their lease is likely to increase the cost of production for the miners, experts said today.
However, overall quantity of exports from the state may not suffer as Chinese appetite for ore is high, they said.
"The decision of the Goa cabinet to impose an additional 15% royalty for the next 20 years as part of renewing mining lease will definitely increase the cost of production," Federation of Indian Mineral Industries (Fimi), Southern zone Chairman Basant Poddar told PTI today.
The Goa cabinet earlier this week had approved an amendment to the Stamp Duty Act under which mine owners will have to pay 15% of royalty for next 20 years for getting renewal of the lease.
The amendment is expected to mop up revenue of Rs 2,500 crore for the state this fiscal, resulting in the additional revenue mobilisation.
The amendment Bill will soon be tabled in the Assembly in the ongoing monsoon session.
He, however, said this amendment, if approved, will have less impact on the quantity of exports from the state.
"Though it will make exports from Goa less competitive in comparison to Australia and other markets, the amount of exports is likely to remain same as China has the required appetite to consume ore from this region.
Goa exports around 35-45 million tonne iron ore to major steel producing nations, out of which majority is shipped to China.
However, Goa Exporters Association officials declined to comment on the issue citing that they would not be able to comment as details are still awaited regarding the new norms.
An iron ore miner from Goa, on condition of anonymity, said the government move will blunt the competitive advantage of the state and thus will be detrimental to miners.
While the country exported around 117 million tonne ore in FY10, it dipped to around 98 million tonne in FY11.
However, the exports had slipped to 60 million tonne last financial year due to the Supreme Court's ban on mining in many parts of the country following illegal mining operations. As a result of this, shipments are set to fall further this fiscal.
