Mining cess increases input costs in Orissa

Even as global majors have lined up steel investments in Orissa, a cess notification has made major minerals such as iron ore, bauxite, chromite, coal and manganese costlier.

The state government has imposed a cess of between 5 and 20 per cent for different minerals through a notification issued yesterday as per the provision of Orissa Infrastructure and Socio-Economic Development Act and its relevant rules.

As per the notification, 20 per cent cess will be levied on bauxite and 15 per cent on coal, iron ore, chromite and manganese ore.

Besides, 10 per cent cess will be collected from dolomite and limestone and 5 per cent from china clay, philite, gem stone, decorative stone, stretite and other minerals.

The cess rates have been fixed by a high power committee, headed by the state steel and mines secretary. The rates will revised every two years.

The objective of the cess is to mobilize additional resources for development of infrastructure and promotion of education, employment and socio economic development programme in rural, backward and mineral bearing areas.

An estimated revenue of Rs 300 crore was expected to be generated every year from this move.

"The money will be kept in a separate account for investment in infrastructure and peripheral development of the mining areas," said state mines minister Padmanabh Begera.

The Orissa Infrastructure and Socio-Economic Development Bill, 2004 had been passed in the state assembly on December 28, 2004.

The Bill was given effect to on 1 February, 2005 after the Governor's assent. However, the mining cess could not be collected due to delay in framing the rules to the new law.

The government had tabled the rules to the new law in the state assembly on 20 March for approval. Now the new cess has come into force with the publication of notification.