To take a decision about the new rate of royalty on Iron ore, the Union mines ministry, on Apr 26, has convened a high level meeting.
It is expected that the current rate of royalty on Iron ore, which is 10% on sale price will be hiked to 15%.
Government of India has notionally agreed on the above. Whereas, the Odisha government is unhappy about only a 5% rise.
In conversation with SteelMint, Mr. Deependra Kashiva, Executive Director (ED), Sponge Iron Manufacturers Association (SIMA) remarked, “Chances are high that the royalty rate on Iron ore will increase by 5% as state government is of the impression that miners are earning huge profits and that it is loosing revenues, which could be invested in further growth of the industry.
“The procurement of iron ore would come down as it will not be affordable looking at the upswing in prices to anywhere between Rs 500-600/MT, when slump in market already exists”, Mr. Kashiva addded.
He also mentioned that the cost of making 1 ton of Sponge iron will move up by Rs 750-800/MT and it would be difficult to pass on the hike to customers, as capacity utilization is anticipated to come down”.
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