The state government is sore over low royalty rates recommended by the Union mines ministry's study group in respect of iron ore, chromite, manganese ore and bauxite.
The study group has suggested royalty for iron ore at 15 per cent of sale price against 20 per cent demanded by the state. The state government has taken into account the FOB (freight on board) price of iron ore of Central PSU National Mineral Development Corporation (NMDC) for calculation of sale price.
Similarly, for all grades of manganese ore, the study group has recommended royalty at five per cent of sale price, lower than the state's demand of 12 per cent. For manganese ore concentrates, the group has suggested that the existing rates may continue.
Peeved over the lower royalty rates, the state steel & mines department has urged the Union ministry to have a re-look on the matter, stating that the rates prescribed by the group do not adequately compensate the state on account of environmental degradation, impact on the people inhabiting the mining areas and depletion of valuable natural resources due to mining activities.
“The rates recommended by the study group in respect of iron ore, bauxite, chromite and manganese ore are much less than the rates proposed by the state government. These rates have been worked out by the study group without taking into account the liabilities under the proposed Mines and Minerals (Development & Regulation) Bill-2011. The recommended rates do not capture the super normal profits made by the mine owners on account of boom in the mineral market”, steel & mines secretary D K Singh said in a letter to the Union mines ministry.
In case of chromite, Odisha had demanded royalty to be pegged at 20 per cent of the sale price on ad valorem basis against which the study group has prescribed 12 per cent for all ore grades.
For bauxite, the state government had pitched for fixation of royalty rate at 1.5 per cent of LME (London Metal Exchange) price. However, the study group has pegged it comparatively lower at 0.6 per cent of LME price chargeable on the contained aluminium metal in ore produced for those despatched for use in alumina and aluminium extraction whereas for non-metallurgical grade, the group has recommended status quo.
Besides seeking revision in royalty rates, the state government has been vociferously demanding introduction of MRRT (Mineral Resource Rent Tax) on windfall gains made by the miners to ensure that the super normal profits earned from mining activities do not get accumulated in the hands of few miners.
The state government expected to garner additional revenue of Rs 4,000-5,000 crore every year from the mining sector on introduction of the windfall tax.
