Govt to levy 10 pc ad valorem royalty on iron ore soon
The government may soon levy a 10 per cent royalty on iron ore on ad valorem basis as the mines ministry has sent a proposal in this regard to the union cabinet for its approval.business Updated: Aug 02, 2009 12:21 IST
The government may soon levy a 10 per cent royalty on iron ore on ad valorem basis as the mines ministry has sent a proposal in this regard to the union cabinet for its approval.
At present, iron ore carries a fixed royalty of up to Rs 27 a tonne, depending on its variety and grade. The proposal is to levy 10 per cent royalty on its prevailing market price.
Royalty is the amount paid by miners to the state government on the mineral content of the extracted ore.
"A levy of 10 per cent royalty on ad valorem basis on iron ore has been proposed. Royalty rates of some other minerals will also be linked to their selling prices. The proposal in this regard has been sent to the Cabinet for its approval," a top mines ministry official said.
Apart from iron ore, minerals like limestone, graphite and dolomite will see royalty rates being fixed at their market price on ad valorem basis, he added.
The practice of a market-price linked royalty is not new to the sector as the government charges a fixed percentage on the sale price of minerals like copper, zinc and lead, diamond and chromite on ad-valorem basis. A change in royalty rates of such minerals have also been proposed, he added.