In a bid to control input costs, private sector steel majors including JSW Steel, Essar Steel and Ispat are seeking lower royalty charges on iron ore meant for domestic consumption. The companies have suggested a royalty regime with lower rates for domestic consumption and higher rates for iron ore meant for exports. This would not only increase payout to the states on iron ore but would also act as a disincentive for iron ore exports.
The move comes even as the mines ministry has proposed that royalty on iron ore, meant for both domestic use and exports, should be fixed at ad valorem rate of 10% on all grades—lump, fines and concentrates.
The proposal has been included in a note to be taken up by the Cabinet soon, a government official said. Currently, the royalty on iron ore varies from Rs 13/tonne to Rs 27/tonne, depending on variety and grade. The new proposal of the mines ministry would result in a ten-fold increase in royalty payout to states on iron ore lump price of Rs3,800 per tonne.
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