The Orissa government and Indian Bureau of Mines (IBM) are working out a compromise formula for the pricing of iron ore mined from the state. The move, in all likelihood, would lead to an increase in the prices of the mineral. The state government had earlier flayed the IBM?s methodology for pricing the ore, saying there was gross under-reporting of the actual market value of the mineral by it, leading to a notional loss to the state exchequer.
According to an official in the Orissa mining department, the state expects R500 crore royalty from iron ore this year. This is a significant increase from R500 crore that the state had earned on the ore during 2009-10, and an estimated about R800 crore in ’10-11.
?Our overall target for mining royalty is R4,000 crore for this fiscal, double the level in 2009-10. Since iron ore is mineral that rakes in bulk of this revenue, a hike in its price (as approved by IBM) would help achieve this target,? the official said on condition of anonymity.
Orissa is among the states that earns substantial royalty from minerals. Iron ore amounts to around one third of its total royalty earnings from minerals, which the impost ranging between R550 and R600 per tonne across various grades.
It is reckoned that iron ore prices in Orissa, as approved by IBM, range between R2,000 to R7,000 per tonne for various grades of the fines and lumps. The government, however, reckons that the prices should be higher. The state wants the prices to be fixed on the basis of highest prices reported by the lessee rather than the average prices reported by the lessees for particular grade and the type of ore for the calculation of royalty.
The Union ministry of mines had directed the two parties to sit together and work out a formula. Another official in the state government said that, ?the prices were mismatched mainly due to differences in logistic costs.?
