Odisha chief minister Naveen Patnaik asked the Centre to raise mineral royalty from 10 per cent to 15 per cent and suggested a mineral resource rent tax. The chief ministers of mineral-rich states such as Chhattisgarh, Odisha, Jharkhand, Karnataka and Rajasthan had last year taken up this issue with the UPA government. Royalty rate on iron ore stands at 10 per cent and coal at 14 per cent.
Increase in royalty rates does not apply to Bengal as it imposes its own state tax on coal at 25 per cent, which is contested by the central government.
Royalty rates for minerals were hiked in 2009 with ad valorem taxes imposed on a host of minerals, including iron, coal, rock phosphate, bauxite and copper.
However, fixed rates per tonne remain on other minerals such as asbestos and limestone. In 2012, the royalty rates for coal and lignite were increased.
The Centre has been fighting against paying higher royalty rates for coal and iron as this will push up costs for user industries such as power and steel plants.
Coal accounts for more than half of power generation and will be required for 85 per cent of the 76,000 megawatts (MW) additional capacity targeted in the next five years.
Increase in coal prices because of higher royalty will translate into costlier electricity.
Officials said the minerals resource rent tax, which was imposed in Australia two years back is a a levy on super profits generated from mining.
Exporters of iron ore could face such a tax in case iron ore mining and exports are allowed to kick-start again after a hiatus because of environmental and legal action, which has seen leases being cancelled and mining stopped in many areas.
Relief for Tata Steel, SAIL
Acting on the Supreme Court's order, the Odisha government allowed eight iron ore mines, including those of Tata Steel and Steel Authority of India Ltd, to reopen.
The reopening of the mines —four of Tata Steel, three of SAIL and one of Odisha Mining Corporation — was cleared by the state government on May 30, an industry source said.