A certain amount paid by any mine owner to the state government, who looks after the mines and regularly keeps an eye upon it, is known as Royalty. However, the royalty is not a part of the profits earned by the mine owner or the lease holder, but, it is related to the quantity of raw material used by the finished product industries or any business enterprise.
Indian government panel has recommended for a 50% hike in royalty for Iron Ore miners which is likely to be announced in June or July 2013. The leading miners of India such as National Mineral Development Corporation Limited (NMDC) and Sesa Goa Ltd. and steelmakers, who have mines of their own, like Tata Steel Ltd. and Steel Authority of India Ltd. (SAIL), will be paying 15% royalty which was 10% till now.
According to the sources the same recommendation was proposed in its first report in May. 2012, which was circulated among the stakeholders. They further said that a study group was constituted in 2011 under the chairmanship of an additional secretary in Mines Ministry. This group is the one who suggested for a hike in royalty fees for the miners in its second draft of the report which is not yet finalised. “The Group in its second report has taken views from various stakeholders including state and centre governments, companies belonging to both public and private sectors and suggested royalty rates be hiked to 15 per cent from 10 per cent now,” a source said.
Federation of Indian Miners Association
It is being assumed that the decision of hike in royalty is taken in accordance that the mines sector is running at great profit incomings. However, the Federation of Indian Miners Association (FIMA) contradicted this assumption and said that the industry will witness a huge loss due to this hike as it is already facing huge job cuts and shutting shops.
“It will also sound death knell for the industry. Apart from royalty itself, there are various other duties, levies which are directly linked to the rate of royalty and will have their adverse impact,” FIMA Secretary General R K Sharma said.