Following is an excerpt from a report in Economic Times.

… The new structure will result in a 10% royalty payout on iron ore of all grades instead of the Rs 13-27 per tonne that states have been getting, depending on the quality of the ore. Revenue for states from the vital input for steel is likely to increase from Rs 250 crore to over Rs 1,500 crore per year.

“Higher royalty payments will certainly impact our expansion projects as lower realisations and even lower margins now leave little with the companies,” said an official of a leading private sector steel company.

The mines ministry estimated the total value of mineral production during 2008-09 at Rs 1.14 lakh crore. Orissa, Chhattisgarh, Jharkhand and Madhya Pradesh are India’s top mineral producing states and they have been pressing the Union government for about two years now to revise the royalty rates.

…Along with iron ore, the new system will lead to changed royalty rates for limestone, zinc, bauxite, manganese, diamond and uranium.

States’ royalty earnings on non-coal minerals are expected to double from level Rs 2,014 crore (at 2006-07 production levels) because of the new structure.

Royalty rates were last modified nearly five years ago and a change has been due since 2007.