In a significant move which is expected to infuse greater funds in states' coffers, a hike of five per cent in royalty rate for iron ore mining, as suggested by a Mines Ministry panel, has been approved by the Cabinet. The hike in royalty rates of 54 other natural resources, which varies from mineral to mineral, have also been accepted.
According to sources, the Union Cabinet in its meeting held on Wednesday, is learnt to have accepted the recommendations on hikes suggested by the Working Group which had been set up by the Mines Ministry in 2012 to revise royalty rates for mining of various minerals notably iron ore. Though the royalty rates are normally supposed to be revised after every three years, there has been no revision in them since 2009.
The Pioneer had exclusively reported on June 23, 2013, that all the mineral-rich states had accepted the Working Group's suggestions on the various levels of hikes in royalty rates. Sources however pointed out that the new rates will come into effect only after a Gazette notification is issued in this regard.
Royalty is a charge which the mine owner has to pay to the concerned state government, under whose jurisdiction the mine which the entity is exploiting, falls. It is not related to profits earned by the mine owner (or the lease holder), but is usually related to the quantity of mineral exploited by the entity.