Odisha projects 15% higher mining revenue for FY15

Odisha produced nearly 78 mn tonne iron ore in 2013-14, higher than 64 mn tonne produced in the year ago period

Despite poor mining activities in Odisha on the back drop of Supreme Court order restricting operation of iron ore and manganese mines and amid fall in mining revenue collection last fiscal, the state finance department has projected 15 per cent rise in collection of mining revenue in 2014-15.

In the year ending March 2015, the state aims to generate Rs 6,346.98 crore revenue from the mining sector, higher than Rs 5,515 cr collected in the last year.

In 2013-14, the revenue collection from the mining sector had fallen by 3.11 per cent from Rs 5,695.70 crore collected in the previous year despite higher output of iron ore. However, state government officials said, the fall in revenue was because of drop in mineral prices.

Odisha produced nearly 78 million tonne iron ore in 2013-14, higher than 64 million tonne produced in the year ago period. But the rates of the minerals, which are linked to royalty payment, also declined in the same period except for couple of months during October-December quarter, when sharp rise was witnessed. Starting January 2014, the international prices of iron ore had come down by 34 percent to trade at $90 a tonne, the lowest in last 21 months as demand for steel has remained sluggish in biggest consuming country, China. State government officials hope different infrastructure projects announced by both state and national governments will have an effect on the raw materials in the second half of this fiscal and will improve royalty collection.

“The rates of iron ore would rise from September-October onwards, coinciding with usual demand uptick and based on progress in infrastructure spending. This will be reflected in iron prices and royalty collection,” said a source in the department of steel and mines of Odisha government. Mining revenue comprises of mineral royalty, surface rent, dead rent and other non-tax charges for production and sale of iron ore, coal, bauxite, etc. Odisha produces highest amount of iron ore and is the second biggest producer of coal in the country. The state government get 10 per cent as royalty over the selling price of iron ore, bauxite and chromite.

Recently, the state government allowed mining operation at eight mines of Tata Steel, Steel Authority of India Ltd (SAIL) and Odisha Mining Corporation (OMC) invoking special provision mentioned in mineral rules, after the Supreme Court had banned mining in 26 large mines. The decision was taken to check dwindling mining revenue of the state.