Odisha miners sceptical about proposed CSR levy

The draft regulation has already received Chief Minister's nod

Mining companies in Odisha are sceptical about an upcoming regulation which would make it mandatory for the mine owners to contribute money equal to their royalty payment to a fund for peripheral development in tribal areas. Though they did not oppose the proposal, they raised questions about how the fund will be utilised.

“I have heard that the Odisha government is coming up with such regulation but I have not got a chance to see the draft regulation. I think we must look at where and how the money will be invested in tribal areas,” said Reeta Singh, managing director of Mesco Steel, which has an iron ore mine in the state.

In July, the Tribes Advisory Council (TAC) headed by Chief Minister Naveen Patnaik approved a draft regulation, which has provisions that mining lessees have to pay an amount equal to their mineral royalty for periphery development. The proceeds from the collection will go to the district peripheral development fund which will be utilised for infrastructure development, improvement of health and education facilities and livelihood support in a sustainable manner for the people living in mineral bearing areas.

The proposed regulation will be named as Odisha (Scheduled Areas) Development of Mineral Bearing Area Regulation, 2013.

The corpus fund will be a few hundred crores, as per an estimate of a government official.

Some miners questioned the requirement of such a fund, when the government has not done anything significant with the cess it used to collect earlier.  

“I really do not understand the need for such a fund as the cess collected from us earlier has not been put to any tangible use. I cannot see any development in the area even after so many years,” said a miner without wishing to be named.

The state government stopped collecting cess on mineral products in early nineties after it lost a case in Supreme Court. It then imposed a cess of between 5 and 20 per cent for different minerals through a notification issued in early 2005 as per the provision of Orissa Infrastructure and Socio-Economic Development Act. The legal validity of the act is under trial now.

Many miners have privately said that the proposed regulation will dent the prospect of mining business in the state as the sector has been reeling under sluggish demand. Moreover, they are worried that if the Union government raises royalty amount, then the ramification will be severe.

Currently, Odisha collects 10 per cent of the sale price of iron ore and chromite ore as royalty as per a Union government decision. The central government is likely to take a decision on royalty revision soon as many mineral bearing states have demanded raising the royalty to augment revenue collection.