Thu, 3 Nov, 2011 |sourced ET
NEW DELHI: The mines ministry will push for a new system of calculating royalties instead of the current practice of basing it on an average price determined by the Indian Bureau of Mines, ministry officials said. Under the new method, pithead prices, on which royalty is based, will be discovered from iron prices across the supply chain.
The ministry says this proposal, which is unlikely to raise royalty collections for states, will be taken up by its study group later this week. In its report on illegal mining in Karnataka, the state Lokayukta had criticized the practice of using the statewise average prices put out by the bureau, saying that it lead to lower royalty collections. The Lokayukta had found that the bureau's weighted average pitmouth value of ore, to be collected from the top 10 non-captive producers, did not accurately reflect market price of iron ore.
The ministry, however, maintains that royalty can only be collected on the pithead price of iron ore and cannot be based on market prices. In May, Orissa chief minister Naveen Patnaik had also asked for royalty to be charged on NMDC's prices or all-India average prices. Last month, in his reply to Patnaik, mines minister Dinsha Patel said the current practice was adopted after states decided that determining sale prices from individual invoices, particularly for captive mines, was difficult.
In February, rule 45 of Mineral Conservation and Development Rules was amended to allow states to collate prices at different points of sale. Until states decide on what is most convenient to them, the mines ministry will suggest this method for calculation of royalties. An upward revision of royalty rates, allowed once in three years, is now only possible after August 2012. States collect a charge either on the tonnage as in the case of limestone which is largely mined for captive use, or on an ad valorem basis. A royalty of 10% ad valorem is levied on iron ore.
(sourced EconomicTimes)
NEW DELHI: The mines ministry will push for a new system of calculating royalties instead of the current practice of basing it on an average price determined by the Indian Bureau of Mines, ministry officials said. Under the new method, pithead prices, on which royalty is based, will be discovered from iron prices across the supply chain.
The ministry says this proposal, which is unlikely to raise royalty collections for states, will be taken up by its study group later this week. In its report on illegal mining in Karnataka, the state Lokayukta had criticized the practice of using the statewise average prices put out by the bureau, saying that it lead to lower royalty collections. The Lokayukta had found that the bureau's weighted average pitmouth value of ore, to be collected from the top 10 non-captive producers, did not accurately reflect market price of iron ore.
The ministry, however, maintains that royalty can only be collected on the pithead price of iron ore and cannot be based on market prices. In May, Orissa chief minister Naveen Patnaik had also asked for royalty to be charged on NMDC's prices or all-India average prices. Last month, in his reply to Patnaik, mines minister Dinsha Patel said the current practice was adopted after states decided that determining sale prices from individual invoices, particularly for captive mines, was difficult.
In February, rule 45 of Mineral Conservation and Development Rules was amended to allow states to collate prices at different points of sale. Until states decide on what is most convenient to them, the mines ministry will suggest this method for calculation of royalties. An upward revision of royalty rates, allowed once in three years, is now only possible after August 2012. States collect a charge either on the tonnage as in the case of limestone which is largely mined for captive use, or on an ad valorem basis. A royalty of 10% ad valorem is levied on iron ore.
(sourced EconomicTimes)
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