Karnataka rakes in INR 270 crore royalty from E auctions

Thursday, 16 Feb 2012

Despite a halt on iron ore mining in Karnataka since July last year, the Karnataka state government has earned a royalty revenue of INR 270 crore, about 62% of the total royalty earnings in the last financial year. With two more months in the current financial year, royalty revenues are likely to go up further.

Mining activity came to a halt in July, when the Supreme Court ordered the closure of mining and transportation of iron ore in Bellary district. Subsequently, on August 26 the apex court also ordered closure of mining in Chitradurga and Tumkur districts.

However, through its orders dated September 2 and 23, the court had permitted sale of about 25 million tonnes of iron ore from the stockpile at various leases in Bellary, Chitradurga and Tumkur districts to ensure supply of ore to domestic steel mills, sponge iron and pig iron units, in and around Karnataka. A monitoring committee comprising forest officials of Karnataka and the director of mines and geology was constituted to supervise the sale of ore through electronic auctions.

Till January 6, the monitoring committee had conducted 18 e auctions, through which close to 11 million tonne of iron ore was sold for INR 2,694 crore. On this sale, the state department of mines and geology has collected royalty of INR 269.4 crore at 10% and INR 323.3 crore towards forest development tax at the rate of 12%

According to the final report on the status of mining leases surveyed by the joint team of the Central Empowered Committee the average sale price of iron ore works out to INR 2,455 a tonne.

Sources close to the process told Business Standard that with this, the royalty receivable by the government for the sale of 25 million tonne of iron ore through E auction may exceed the total royalty received by it for ore during 2010-11.

In addition, about 700,000 tonnes of iron ore dump belonging to the state-owned Mysore Minerals Limited and lying outside its sanctioned lease boundary has also been sold for INR 79.8 crore (and the royalty, FDT payable on the sale), at INR 1,140 a tonne. Earlier, MML used to sell the over burden/waste dump at substantially lower rates.

According to information provided by the DMG to CEC, during 2010-11, the state government received INR 435 crore as royalty for 33.75 million tonnes of iron ore produced and sold in the state. The average rate works out to INR 129 a tonne.

(Sourced from BS)