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Govt panel may suggest hike in royalty fees

Govt panel may suggest hike in royalty fees

A committee appointed by the union government to recommend on the amount of royalty to be paid by iron ore miners to state governments would submit its report in the next few weeks, media reports indicate.

According to source-based information, the committee would suggest the government to raise the royalty fees of iron ore miners by 50 percent.

If the suggestion is implemented, miners like NMDC and Sesa Goa, and captive miners like Tata Steel and Steel Authority of India (SAIL), may have to pay 15 percent of sales to provincial governments, compared with 10 percent now.

Steel makers who already suffer from lower demand for their products and hence margin pressure may face rise in raw material cost if the royalty fees on ore is raised.

For ore exporting firms, a possible rise in royalty fees may erode competitiveness against bigger rivals, including BrazilÂ’s Vale SA and AustraliaÂ’s Rio Tinto Group and BHP Billiton.

If implemented, this would be a remarkable development in the sector before the introduction of a new mining law, which will require miners to set aside an amount equal to royalty payments for social welfare programs. The law is awaiting parliamentÂ’s approval.

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