Slump in iron ore prices hurts mining revenue collection

Actual mining revenue by June-end was Rs 964.25 cr, Rs 329 cr short of the target of Rs 1,293 cr fixed for Apr-June qtr

The downtrend in iron ore prices coupled with closure of some key iron ore mines hurt collection of mining revenue in Odisha in the April-June quarter.

Actual collection of mining revenue by end of June stood at Rs 964. 25 crore, Rs 329 crore short of the target of Rs 1293 crore fixed for the period.

 

The collection of mining revenue marks a de-growth of 3.80 per cent over the same period of 2014-15 where collection was Rs 1002.35 crore. It also represents a fall of 22.33 per cent compared to Rs  1290.55 collected in the comparable period of 2013-14.

“The shortfall in mining revenue collection is due to the lower average sale price of iron ore published by Indian Bureau of Mines (IBM) as compared to the same period of 2013-14. Since there is a slump in demand of iron ore and fall of price, we are making efforts to operationalise shut mines wherever possible as per law to step up revenue collection”, said a government official.

 

Iron ore prices are expected to remain tepid, throwing challenge on the state government to shore up collection.

“We believe that iron ore prices will continue to remain subdued as Chinese demand is weakening and supply pressure is rising. On longer term as well, we don’t see any recovery in iron ore prices since Chinese incremental steel production would come from EAF (electric arc furnace) route not BF (blast furnace) route, which implies less demand for iron ore. Supply addition from low costs countries like Brazil and Australia would ensure market remains flooded with iron ore”, said Giriraj Daga, portfolio manager,  SKS Capital & Research Ltd.

 

The state government has set mining revenue collection target of Rs 6626.17 crore in this fiscal. In 2014-15, the actual collection in this category was Rs 5310.04 crore. Due to tepid collection of mining revenue, the state's non-tax collection growth remained flat. The non-tax collection totaled to Rs 1277.55 crore in the April-June quarter as against Rs 1269.94 crore in the corresponding period of the year-ago fiscal. Mining revenue is the single biggest contributor to the state's no-tax revenue kitty, with a whopping share of over 80 per cent.

The state's own tax revenue, however, expanded 45.31 per cent in the same period from Rs 3427.31 crore to Rs 4980.21 crore led by robust growth in segments like land revenue, stamps & registration, state excise and taxes and duties on electricity.

Collection in stamps & registration zoomed 689 per cent to Rs 987.64 crore compared to Rs 125.18 crore. Land revenue also showed a spurt of 109 per cent as it grew from Rs 53.33 crore to Rs 111.50 crore.

Overall own tax revenue collection is targeted at Rs 21280.37 crore for 2015-16.