Orissa is expected to garner additional revenue of Rs 4,000-5,000 crore from the mining sector if the Centre introduces Mineral Resource Rent Tax (MRRT), said state minister for industries and steel & mines Raghunath Mohanty.
Chief Minister Naveen Patnaik has been demanding introduction of MRRT 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 merchant miners, Mohanty said in the state assembly.
The Chief Minister has written to Union minister of state for mines Dinsha Patel and also sought the intervention of Prime Minister Manmohan Singh, pitching for levy of MRRT on miners, the minister said.
Justifying the need for introduction of MRRT, Patnaik had pointed out that during 2001-11, iron ore sales have jumped ten-fold from Rs 1092.98 crore to Rs 11285.33 crore while net profit has surged 27 times in the said period from Rs 343.94 crore to Rs 9727.17 crore.
As per the audited financial results of public sector miner National Mineral Development Corporation (NMDC), the average sales income from iron ore per tonne has gone up from Rs 625.99 in 2001-02 to Rs 4287.74 in 2010-11, a jump of 585 per cent.
"The analysis of financial results of NMDC clearly indicates generation of windfall gains for mining companies due to the fact that the prices have increased nearly tenfold since 2000, the time when the iron ore mining industry could be said to be making normal profits, while mining costs have more or less remained the same”, Patnaik said in his latest letter to the Union mines minister dated January 25, 2012.
"While iron ore prices more than doubled in 2004, the rate of royalty on highest grade of iron ore was increased from Rs 24.50 per tonne to a paltry Rs 27 per tonne for lumps and from Rs 14.50 per tonne to Rs 19 per tonne for fines. Thereafter as per the provisions of Mines and Minerals (Development & Regulation)- MMDR Act-1957, the royalty could have been revised substantially upwards in 2007 to reflect the increase in prices. However, the revision was done only in August 2009 and that too at the rate of 10 per cent of sale price as published by Indian Bureau of Mines (IBM) on ad-valorem basis, whereas on the basis of the super normal profits existing, the state had demanded 25 per cent royalty on ad-valorem basis.
This delay in revision of royalty and the low rates at which it was fixed have led to excess profits being made by private mining companies at the expense of the state government”, the letter added.
