Odisha end-use industries pitch for rational royalty rates

The Federation of Indian Mineral Industries has already moved the Union mines ministry on non-compliance by the Odisha govt.

With iron ore prices in Odisha not correcting significantly despite contrary market trends and miners burdened with new levies in the form of District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET), end-use industries have made a feverish pitch to the state government to rationalise royalty rate.

Presently, the Odisha government is charging royalty at the highest rate irrespective of the grade of ore in stark violation of statutory laws. Though, the state government has lost its case in the Revision Authority under Union mines ministry, it is still dithering on changing a skewed royalty formula that has teared into the operational viability of miners.

"The state government is charging royalty which is not in conformity with Section 64 B of Mineral Concession Rules (MCR), 1960 and Section 9 of MMDR (Mines and Minerals Development & Regulation) Act. They are yet to rationalise the royalty rate despite losing the legal battle. At a time when the industry is reeling under tremendous pressure, it is prudent that the government corrects this practice”, said Manish Kharbanda, executive director and group head (mines & minerals), Jindal Steel & Power Ltd (JSPL).

The Federation of Indian Mineral Industries (FIMI) has already moved the Union mines ministry on non-compliance by the Odisha government.

According to FIMI, the state government continues to defy and charges royalty for fines at the highest rate meant for 65 per cent garde iron ore whose production in the state may not be more than 15 per cent. In other words, the royalty at uniform rate of Rs 620 per tonne is being charged for fines as well as lower grades of lump ore.

The state government, however, is yet to take a call on the issue. “Yes, the proposal for revision of royalty rate is under

consideration. But, we are yet to take a call on the matter", said a government officer.

According to Section 9 of Mines and Minerals (Development & Regulation) MMDR Act and Rule 64 B of Mineral Concession Rules (MCR), the same royalty rate cannot be computed for different grades of ore.

But the state government via a circular in September 2010 was charging royalty uniformly in violation of mining laws. The government citing an observation in the report of the Comptroller & Auditor General of India said royalty cannot be charged differentially unless the various grades of ore are stacked up separately.

The government's circular was challenged by merchant miner R P Sao in the Revision Authority (RA) under Union mines ministry. The RA in its final order in March this year, quashed the state government's circular, asking it to realise royalty as per Section 9 of MMDR Act read with Rule 64 B of MCR.