While the Ministry of Mines is in the process of developing a National Mineral Index (NMI) for various minerals, the Federation of Indian Mineral Industries (FIMI) has urged the Odisha Government to take up the issue with the Centre.
FIMI secretary general RK Sharma has brought to the attention of the State Government that the Union Ministry is developing the NMI on the lines of National Coal Index (NCI).
The NMI is that the present statutory payments including auction premium, royalty, DMF and NMET based on Average Sale Price (ASP) published by IBM.
The FIMI has said that present system of ASP is a realistic price discovery mechanism, wherein the actual transaction price of top 10 non captive mines in a State sold at arm’s length basis is captured.
In short, the ASP is the weighted average of the ex-mine prices of non captive mines, pointed out the FIMI.
The FIMI said the present system of ASP published by the IBM is the most effective and transparent way to ensure price discovery and revenue to the exchequer.
So the mineral industry’s body has urged the Government to consider continuing with the present ASP system and even if NMI is introduced, the fundamentals of the ASP system should be incorporated within NMI, urged FIMI.
The FIMI pointed out that the National Coal Index (NCI) is based on Coal India Limited (CIL) notified prices, CIL auction prices and import prices.
While majority of the coal consumed in the country is for power, which is a regulated sector, all non coal minerals are consumed for non –regulated sectors such as steel, aluminum, cement etc.
Considering this fundamental differences of regulated and non-regulated consuming sectors, the methodology of calculation of NMI should fundamentally differ from that of NCI, pointed out an expert.
Further, NMI should capture only the mineral sales transactions done at arm’s length basis so as to avoid any conflict of interest or manipulations by certain players by transacting at artificially low prices, pointed out FIMI.
As NMI is expected to form the basis of all statutory payments, therefore, allowing non-arm’s length transactions especially the transactions by captive players in NMI may lead to distortions and substantial reduction in statutory payments, resulting in huge loss to the exchequer.
The FIMI has urged the Government that NMI should only capture the transactions made at arm’s length i.e. sales by non captive mines and only those sales by captive mines, which are done at arm’s length, adding any quantity of mineral used for captive purpose should not be considered in NMI.
Under this backdrop, FIMI has requested the State Government to take up the issue with Ministry of Mines and impress upon them to continue the system of ASP published by IBM, said sources.