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Goa seeks reversal of proposed hike in iron ore royalty rates

Thursday, 21 August 2014 - 7:31pm IST | Agency: PTI

Goa government will demand a rollback of hike in royalty rates of low grade iron ore proposed by Centre, saying profit margins of mining industry have shrunken due to a steady fall in international prices since 2011.

"Royalty on the low grade ore of less than 58 % Fe should be ten %, while it can be 15 % on the higher grade ores. I will take up the matter with the Centre and demand a rollback," Chief Minister Manohar Parrikar said in the Legislative Assembly. The Central government yesterday gave nod to increasing royalty rates on minerals including iron ore and bauxite, a long-awaited move that will significantly swell the annual revenue of states.

With this in-principle revision, the royalty rates on the ore could go up from 10 % to 15 %. The decision has angered the mining industry in Goa which is on hold for last two years due to a ban by Supreme Court, which was lifted recently. "International prices of iron ore have crashed and the concept of windfall profit which existed till 2009 is no more. The ore which is below 54 degree Fe cannot be exported as it is not affordable due to falling prices. If that happens, our dumps (rejected iron ore) will not be able to be exported," Parrikar said. 

Earlier, the Leader of Opposition, Pratapsingh Rane said that there will be a number of suicides in the state if mining activity fails to resume. Rane had also said that the increased royalty on the ore would be unaffordable for exporters. The rates of royalty, revised in every three years, for major minerals excluding coal, lignite, and sand for stowing were last revised in August, 2009. It is charged on ad valorem basis, depending on increase/decrease in mineral prices.

Royalty is a tax levied by government on miners in lieu of transfer of ownership rights of mines. While the government views it as a source of revenue, industrialists look at it as part of production costs.




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