Job Vacancies

New Iron Ore royalty rate to hit India’s Steel production

The budget proposal to increase the royalty of iron ore from 10 percent to 15 has raised serious concerns in the industry. The proposal generated fears of an escalated cost of steel production coupled with a surging inflation rate.
Addressing the issue, ASSOCHAM urged the Govt to review the proposal as a 5 per cent increase in the royalty rate coupled with 15% increase in the freight rate by the Ministry of Railways will increase the cost of steel-making further and will push the inflation upward which shall have cascading affect on the Indian economy at large.
The industry body said the existing 10 per cent royalty on iron ore is already the world’s highest as Brazil, the largest iron ore producer with a domestic steel production comparable to India, has a royalty of 2 per cent. Similarly, Australia has a royalty of 2.7 to 7.5 per cent (depending on ore type).
The royalty on iron ore, until August 2009 was based on Rs/ton basis. Subsequently, the rates were changed to 10 per cent of sales price. Prior to the changes, royalty was in the range of Rs 8 to Rs 27 per ton, depending upon the quality of iron ore.
Source: Commodity Online