Revise royalty on iron ore

BHUBANESWAR: Seeking early revision of royalty on iron ore in view of the huge profits made by mine owners, Chief Minister Naveen Patnaik has demanded imposition of mineral resource tax. He also demanded that there should be an early revision of royalty on iron ore which is 10 per cent of the sales. In a letter to Prime Minister Manmohan Singh, the Chief Minister has said the insatiable demand for the raw material in the export market has made it a highly profitable commodity with returns from mining being far in excess of economically acceptable rates. Such profits are unheard of in other industries, he said and urged Singh to impose a mineral resource tax on iron ore. “This has led to a situation where in spite of the State being the owner of resources, the mine owners are benefiting beyond any measure of reasonable returns,” he said. The Chief Minister pointed out that he is concerned about the huge profits accruing to merchant mining companies, a large number of which is in private hands.  In fact the huge profits being made by private mining companies, disproportionate to any effort made, has triggered the demand from various groups to nationalise mineral resources, he added. As State is the owner of iron ore resources, which are non-renewable and can be extracted only once, it is important that the super normal profits from natural resources do not go to a few hands, he said and added that the community should get fair returns.  The mineral resource tax should be similar to that imposed by the Australian government to be implemented from July 1, 2012, he said. The Australian government has announced mineral resource rent tax of 30 per cent on iron ore. On the same line, a mineral resource rent tax should be levied on iron ore, to be charged at 50 per cent of the surplus rent, and should accrue to the states, he said.  Naveen said as and when the surplus rent decreases the tax too will automatically decrease. The additional royalty will enable the state to invest in infrastructure and create jobs for community affected by mining, he said.