The Orissa government wants the Centre to turn over revenues generated from the new export levy on iron and chrome ore back to the state.
The demand will be relayed in a summit between Prime Minister Manmohan Singh and Orissa chief minister Naveen Patnaik here on Thursday, according to an official familiar with the agenda who didn’t want to be identified.
The delays plaguing steel makers, such as South Korea’s Posco, and their planned entry and expansions in Orissa are expected to dominate the discussions.
Posco’s $12 billion (Rs50,400 crore) investment is stalled as it struggles to find a dedicated iron ore mine and secure the land needed for its proposed plant.
At the same time, mineral-rich states also want their share of the Centre’s imposition of the export duty on miners. The Centre does not share export and import duties with states.
From March this year, an export duty of Rs300 per tonne was imposed on iron ore and Rs2,000 per tonne on chrome ore and chrome concentrates.
Iron ore sells at an average price of $55-60 per tonne while chrome retails for $350 per tonne in the international ma-rkets.
Both minerals are used in steel manufacturing: Iron ore is one of the seven critical raw materials used in steel making. Chrome ore, or chromite, is combined with iron to make the alloy ferro chrome, used in stainless steel production and as a strengthening material for other alloy steel.
An official who is working at making mining leases available to steel investors in the state said, “Whatever is the duty levied on iron ore and ferro chrome, the state should get a share.”
Last year, exports of Indian chrome ore and chrome concentrates stood at 4.34 lakh tonnes and 8.91 lakh tonnes, respectively. Orissa is the dominant producer of chrome ore, followed by Karnataka.
India exported 89.2 million tonnes of iron ore last year. Orissa is the country’s largest producer of iron ore at 49.8 million tonnes and has a potential reserve of four billion tonnes. But the state’s steel production is a mere three million tonnes.
Jharkhand, another state trying to lure steel investors, has not directly asked for its share of revenues from mineral export duties.
But a state official, who spoke on condition of anonymity, said its royalties should reflect the Centre’s increased kitty.
At present, royalty on iron ore is Rs4-24 per tonne, depending on the iron ore grade, for all states, an amount fixed by the Centre. But states say its too small an amount.