The Orissa government has sought Prime Minister?s (PM) intervention in levying the super-profit tax on iron ore minors, after the mines ministry turned down its proposal. The state government has sent a letter in this regard on Thursday. ?We have already given many reasaons to the mines ministry why such a levy was important, however, they have rejected our request. That is why we have now approached the PMO (prime minister?s offfice).
Earlier, in a letter to state chief minister Naveen Patnaik, Union mines minister Dinsha Patel has told him that the profits being earned by other miners cannot be estimated on the FoB (free on board) value of the mineral as it includes cost of transportation and handling, on which royalty cannot be levied.
??It may not be appropriate to only see FoB value of iron ore to come to the conclusion that super profits are being generated,?? the mines ministry said in its letter to the state government.
Orissa government had last year sought the central ministry?s concurrence to levy a special tax similar to the Australia?s mineral resource rent tax on miners, which are supposedly making ??super profits??. Disagreeing with the proposal, the mines ministry told the state that ??it was not prudent to to generalise that the entire iron ore mining sector was earning profits to the scale equivalent to NMDC, considering that it was a fairly large miner with high grade deposits??.
Although royalties are levied by the state, the rates are fixed in consultation with the Centre.
Rejecting the Orissa government?s argument that the average price of iron ore in the state was lower than many other states, the mines ministry said that ??the prices were comparable and in fact, it was better than the average price of iron ore in states like Chhattisgarh and Karnataka??.
The iron ore price for fines up to 55%-58% in Orissa in December 2011 was R1,042 per tonne as against R 2,866 in Chhattisgarh and R1,640 in Karnataka. For lumps up to 62-65% fines, however, the prices in Orissa were more at R5,221 per tonne as compared to R4,289 in Chhattisgarh and R4,250 in Karnataka.
The state?s royalty collection for iron ore has also more than doubled in the last few years even as its production fell marginally. The iron ore royalty grew from R149 crore in 2008-09 to R1,852 crore in 2010-11. In 2009-10, the iron ore production was 80.90 million tonne and the royalty was R668 crore, which rose by 177% in the next year, even as the production fell to 76.35 million tonne.
The mines ministry said that the proposed MMDR Bill requires the miners to pay an equivalent amount of royalty and there are provisions for State Mineral Funds which can serve as a substitute to the suggested ??mineral resource tax?? by the Orissa government.
