The Federation of Indian Mineral Industries (FIMI) on Monday opposed the proposed market-linked royalty on minerals, including iron ore, citing adverse ground situation and instead asked the government to hike the levy in the existing production-linked system.

Addressing a press conference here, FIMI President, Rahul Baldota, said the situation was not favourable for an ad valorem royalty rate regime on minerals. “We are opposed to it. The government should rather increase the royalty in the prevailing system. As a concept, FIMI welcomes ad valorem royalty, but its implementation part would hit the miners hard. If the government implements it, merchant miners will not be able to pass on the cost to end-users,” Mr. Baldota said.

At present, the government levies a fixed charge per tonne of mineral produced as royalty, the amount paid by companies to the State governments for mining the mineral.

On July 31, the Cabinet Committee on Economic Affairs approved the 10 per cent ad valorem royalty rate on iron ore, besides hiking the levy on minerals like copper, zinc and lead, something that the government is likely to notify soon.

Mr. Baldota said in the ad valorem royalty system, miners would have to pay the sum in advance on an ad hoc basis as the state agency, Indian Bureau of Mines, would take three to four months in computing the actual rate of the mineral for a said month. This becomes a bottleneck mainly in the case of claiming refunds when the rate given by them was lower than what the miners had already paid, he added.

Explaining further, FIMI Secretary General, R. K. Sharma, said the government should first do away with the 20 per cent rate charged by the State governments on the value of a mineral, on which later the royalty was levied. All this adds a lot of pressure on the mining firms. “The ad valorem system adds to corruption as problems like the transportation cost which differs from port to port is not taken into account,” he added.

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