 "Mining, Iron ore")
Even for the lowest grade of iron ore fines, the miners are currently paying royalty at the highest rate in contravention of the mining laws. Though the state government has lost its case in the Revision Authority under Union mines ministry, it is still dithering on changing a skewed royalty formula that has teared into the operational viability of miners.
With the Government of India notifying the contribution to be made to the District Mineral Foundation (DMF), the worries have piled up for the miners.
"The royalty charged by the Odisha government on major minerals such as iron ore uniformly irrespective of their grades has been contravening the provisions of MMDR (Mines & Minerals- Development & Regulation) Act and MCR (Mineral Concession Rules) 1960, thereby hitting the economics of value addition industries. The Appellate Authority has already quashed this practice. We are hopeful that the Odisha government will be issuing the fresh notification for applying differential royalty based on the grade quality of iron ore at the earliest without further delay. Such steps will result in rationalization of the raw material prices and will be meaningful steps for improving ease in business in the state. It will also result in sustainable industrial prosperity of Odisha", Manish Kharbanda, executive director and group head of mines and minerals, Jindal Steel & Power Ltd (JSPL).
The Federation of Indian Mineral Industries (Fimi) has already moved the Union mines ministry on non-compliance by the Odisha government.
"Despite directions by the Government of India and several judgements by the Supreme Court, the state government continues to defy and charges royalty for fines at the highest rate meant for 65% garde iron ore whose production in the state may not be more than 15%. In other words, the royalty at uniform rate of Rs 620 per tonne is being charged for fines as well as lower grades of lump ore. We would be grateful if you can take up the issue with the state government to charge the royalty on different grades of iron ore lumps and fines as per rate applicable to the respective grade", Fimi's secretary general R K Sharma said in a recent letter to Union mines secretary.
The state government, however, is yet to take a call on the issue.
"The proposal for revising royalty formula is under consideration of the state government. But the matter is being vetted by the law department and no decision has been taken yet", said a senior government official.
According to Section 9 of Mines and Minerals (Development & Regulation) MMDR Act and Rule 64 B of Mineral Concession Rules (MCR), the same royalty rate cannot be computed for different grades of ore. But the state government via a circular in September 2010 was charging royalty uniformly in violation of mining laws. The government citing an observation in the report of the Comptroller & Auditor General of India (CAG) said royalty cannot be charged differentially unless the various grades of ore are stacked up separately.
The government's circular was challenged by merchant miner R P Sao in the Revision Authority (RA) under Union mines ministry. The RA in its final order in March this year, quashed the state government's circular, asking it to realise royalty as per Section 9 of MMDR Act read with Rule 64 B of MCR.
Presently, the royalty rate for iron ore lumps and fines (62-65%) stands at around Rs 600 a tonne in Odisha and the same rate is applied even to lower grade ore. Rationalisation of royalty would slash rates to Rs 539, Rs 463 and Rs 456 a tonne for 62-65%, 60-62% and 58-60% Fe grade lumps respectively. Similarly, post rationalisation, the royalty rates are expected to fall to Rs 274, Rs 203 and Rs 203 for comparable grades of fines.
