Central govt hikes royalty for gold, iron-ore mining

  • Chetan Chauhan, Hindustan Times, New Delhi
  • Updated: Sep 10, 2014 23:12 IST

The government has revised royalty rates for about 50-odd major minerals including gold, bauxite, iron ore and limestone to increase revenue of the state governments from natural resources but has decided to dump the new mineral development bill that provided for mandatory sharing of profits with locals.

The mines ministry last week notified new rates for major minerals as demanded by several chief ministers, such as Naveen Patnaik of Odisha and Raman Singh of Chhattisgarh, in order to boost state revenues.


A big change brought out in the new rules is that the royalty would be calculated on basis of average sale price instead of their earlier norm of sale price. “This has been done to bring in clarity in rules as some states had fixed royalty on lower sale price than the average resulting in loss to the government revenue,” a ministry official said.

The mines ministry fixes royalty for major minerals whereas the state governments decide on royalty rates for minor minerals. Royalty for coal is fixed by the coal ministry.

While the royalty for many minerals have been slightly increased the royalty for gold has been doubled from two to four percent and increased 50% for iron ore from 10% to 15%. Royalty for lead- and lime-based minerals have been increased by about 20% and that of manganese ore has also been hiked by about 10%.

The mechanism to calculate royalty on graphite has been changed from ad valorem basis to tonnage mined while two more categories for calculating royalty have been introduced.

However, while the rates have gone up, the ministry has quietly dumped the Mines and Mineral (Development and Regulation) Bill of 2011 that stipulated a mechanism for ensuring that locals benefited economically and socially from mining. The bill had said that a district mineral fund should be set up in which the royalty would be deposited and provided for 26% mandatory sharing of profits by companies with locals through a district development authority.

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