New Delhi: The chief ministers of Orissa, Jharkhand, Chhattisgarh, Rajasthan and Karnataka urged the Union government on Monday for higher royalties on the sale of iron ore.
A new national mineral policy, expected before Parliament next week, suggests a 7.5% royalty on the precious commodity, but the ore producing states want it to be as high as 20-25%.
They met home minister Shivraj Patil, who headed the group of ministers examining the new mineral policy, and demanded that royalties be
raised from as little as 2%.
Taking stock: Home Minister Shiv Raj Patil met state chief ministers asking for a different calculation of royalties on their iron ore.
Jharkhand, Orissa and Chhattisgarh also demanded that captive iron ore mines should be given to firms that want to upgrade or add value to the ore within the state.
“Unless you allow value addition and generate local employment, we will not be able to resolve the Naxal problem,” said Chhattisgarh chief minister Raman Singh.
The move comes before a report on royalty for major minerals is expected to recommend raising rates by October this year. Ore mining companies say the government should not change the royalty structure as it already imposes an export levy of between Rs50 and Rs300 per tonne, depending on grade.
Rates are revised every three years under the existing guidelines of Mines Act; the last revision took place in 2004. At present, the state governments charge royalties of Rs16-28 per tonne. Iron ore joins three other minerals—graphite, china clay and asbestos—on which royalties are calculated based on total number of tonnes.
“We are going to ask the Prime Minister to share those recommendations of the group of ministers on the mineral policy with all the states before it goes to Parliament,” said Orissa chief minister Naveen Patnaik after the meeting.
“The policy must be in the interest of the state where the vast number of poor people live.” Orissa is alo demanding that a share of the export levy on iron ore must come to the states.
Representatives from Rajasthan demanded that rules be relaxed on the distribution of prospecting and mining licences, giving a fair chance to state public sector mining companies to compete.
Chhattisgarh’s Singh said such scenarios represent larger employment opportunities for states.
As iron ore prices witness unprecedented increases on the back of a steel boom, states also want royalty revisions to take place every two years.
Orissa officials say the state earns a mere Rs80-90 crore as royalty from iron ore when its total market value is estimated at Rs9,000 crore.
The Federation of Indian Mineral Industries maintains that the double pressure of export levy and increased royalty will hurt mining companies and their bottom line.
The group favours the continuation of a tonnage-based royalty system, instead of a so-called ad valorem system, which it says will be difficult to implement and lead to litigation.
Mines minister Sis Ram Ola, who also attended the meeting, said the Centre will look out for the states’ interests.
“We will not hurt any states’ rights,” Ola said. “The exports gap will be reviewed after five years.”
Last December, the five state chief ministers wrote to Prime Minister Manmohan Singh asurging him to intervene on the issue of mining of major minerals.