The government may soon increase the royalty rates on extraction of minerals like copper, iron ore and zinc to enrich the exchequers of states possessing these resources.
A Committee of Secretaries is scheduled to meet in the first week of June to finalise the new royalty rates after which the matter would be placed before the Cabinet for final approval, a top government official told PTI.
Mines Minister Bijoy Krishna Handique, who took charge of the ministry yesterday, has said the revision of royalty rates is on his top priority list.
The royalty rates on minerals are normally revised every three years. Last assessment was done in 2004 so the new revision is due since 2007.
The ministry has been working on the proposed changes in royalty for the last two years. However, the quantum of the proposed hike could not yet be ascertained.
Mineral-rich states like Jharkhand and Chhattisgarh earn in the range of Rs 1,500-4,000 crore per annum from royalties.
Even as state governments see their cash reserves inflating by the Centre's move, miners like Vedanta and NMDC, which have been hit by the global economic crisis, feel it would aggravate things for them as they would have to shell out more money.
Royalty on minerals are calculated on the mineral content in ore extracted. As per the last assessed rates, on iron ore lumps a mining firm pays up to Rs 27 per tonne as royalty. On iron ore fines it shells out up to Rs 19 a tonne.
On copper, the royalty rates stand at 3.2 per cent of the prevailing London Metal Exchange prices (LME) while on zinc and lead it is 6.6 per cent and 5 per cent respectively.
An industry observer said, "The state governments have seen a decline in their royalty collection as LME rates of all the minerals crashed by up to 70 per cent on account of waning demand amid the global economic crisis. The move may help them to bridge the deficit," an industry observer said.
Source: The Hindu
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