Non-coal mineral royalty may rise

Coal and Mines ministry circulated cabinet note and proposal expected to be taken up soon

The Centre is expected to increase royalty for non-coal minerals by around 11 per cent for most products, which will result in an increase of up to Rs 500 crore revenue for states.

The coal and mines ministry has circulated a Cabinet note and the proposal is expected to be taken up by the Cabinet Committee on Economic Affairs shortly.

The last royalty revision was undertaken in September 2000. The Centre has to revise royalty rates after a minimum three years under the Mines and Minerals (Development & Regulation) Act, 1957.

The entire royalty received from minerals is paid by mining companies to states and the Centre does not have a share in the resources.

No estimates of royalty accruing to states were available with the coal and mines ministry. According to one estimate, states realise Rs 1,000 crore as royalty from minerals, while another estimate puts the figure at over Rs 5,000 crore.

Officials said the Centre had tried to ensure that the royalties were revised in a manner that the consumers and industries, using minerals as intermediaries, were not affected.

The government will notify the changes in the royalty once the Cabinet Committee on Economic Affairs clears the revised rates for 50 products covered by the Central legislation.

While the royalty rates are linked to the sale price on ad valorem basis in case of most minerals, for minerals like bauxite, copper, nickel and zinc, it is linked to the prevailing price on the London Metal Exchange.

In case of gold, the royalty is paid on the basis of the price of the London Bullion Market Association.

At present, the royalty on primary gold is fixed at 1.5 per cent of the London Bullion Market Association Price (London Price) chargeable on contained gold in ore products. For by-products, the rate is fixed at 2.5 per cent of the London price.

For copper, the current rate is fixed at 3.2 per cent of the London Metal Exchange price, but is charged on contained copper in the ore. The zinc royalty is fixed at 0.2 per cent of the London Metal Exchange price and for zinc it is 6.6 per cent of the London Metal Exchange price.

For iron ore, the royalty ranges between Rs 3 per tonne and Rs 24.5 per tonne depending on the grade of the ore.

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Finding revenues

• The royalty to be hiked by around 11 per cent for most products.
• This will bring in Rs 500 crore revenue for states.
• The entire royalty received from minerals is paid by mining companies to states and the Centre does not have a share in resources.
• The Centre has to revise royalty rates after minimum three years under the Mines and Minerals (Development & regulation) Act, 1957.