Orissa will raise the demand for doubling of royalty on six bulk minerals- iron ore, manganese, bauxite, chromite, limestone and dolomite before the Government of India.
A panel constituted by the state government under secretary (finance) will submit its comments by January 31 to the study group on royalty formed by the Union mines ministry.
“The Union mines ministry had asked state governments to submit their views on royalty revision by January 15 but we have sought time till January 31. Our panel will pitch for doubling of royalty on the six bulk minerals,” said a highly placed official source.
The state will also place the demand for raising dead rent on minerals.
Dead rent is the rent fixed for mines without considering the fact whether the mine is profitable or not. It is mostly fixed in a mineral lease. This rent must be paid whether or not minerals are being extracted from the mines.
The Union ministry of mines had recently constituted a study group headed by additional secretary (mines) for revision of rates of royalty and dead rent for minerals.
The state government had demanded that the royalty rate needs to be made ad valorem for all minerals and raised to at least 20 per cent to ensure that that the state gets a fair share from its natural resources.
The state Chief Minister Naveen Patnaik had also called for imposition of mineral resources rent tax at the rate of 50 per cent of super normal profits made by the miners. The Union mines ministry, in its latest communication to the state government, had called for closer scrutiny on the windfall tax proposal to establish whether the mining industry was making any super profit.
Presently, the royalty rate for iron ore and chromite has been pegged at 10 per cent of sale price on ad-valorem basis while for manganese ore, it is 4.2 per cent of the sale price. For bauxite, the royalty stands at 0.5 per cent of the aluminium metal price on the London Metal Exchange (LME). For F Grade coal, the royalty is determined by the formula- a+bp where a= Rs 55, b= five per cent and p being the pithead price of coal.
The state government had also demanded that coal royalty be fixed at 20 per cent of market price of the dry fuel. This would help the state garner Rs 1,600-17,000 crore per annum by way of coal royalty instead of Rs 900 crore under the current royalty formula, said the source.
Royalty is an amount payable by a lessee to the lessor for removing or consuming a mineral as per Section 9 (1) of the Mines & Minerals (Development & Regulation) Act, 1957. Section 9 (3) of the Act empowers the Central government to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification.
