Hike in royalty rate on iron ore will doom the mining sector and make some reserves univable, a Goa-based mineral exporters' body has said.
"Any enhancement of royalty rates will have dire consequences on the industry apart from being detrimental to mineral conservation," Shivanand Salgaocar, President, Goa Mineral Ore Exporters' Association (GMOEA) has said in a letter to Mines Minister Narendra Singh Tomar.
"The move would make some reserves unviable to mine," he added.
The Mines Ministry has recently floated a draft Cabinet note for inter-ministerial discussions on increasing royalty on iron ore from 10 per cent at present to 15 per cent.
Royalty is a tax levied by government on miners in lieu of transfer of ownership rights of mines. While the government views it as a source of revenue, industrialists look at it as part of production costs. The revision of royalty rates has been due since 2012.
If approved by the Cabinet, the annual royalty outgo of the miners would swell by 41 per cent to Rs 13,270 crore, according to industry estimates.
Salgaokar said that although Goa produces some very low grades of ore which are treated as waste elsewhere, they are subject to the same rate of royalty of 10 per cent although the cost of mining is the same for these grades.
"The taxes on iron ores have multiplied over the last few years making iron ore one of the highest-taxed commodities, thereby putting severe strains on the long-term sustainability of the mining industry," he said.
Iron ore attracts 30 per cent export duty.
GMOEA said the proposal for any increase in royalty rates for iron ore needs to be avoided as the present rate itself is abnormally high as compared to any iron ore producing country.
