KOLKATA (miningweekly.com) - The Indian government has formally buried its proposal for a windfall tax on iron-ore mining, despite a demand for such a tax by several provinces.

According to an official in the Mines Ministry, the government maintained that no fresh levies on iron-ore mining modelled on the Australian mineral resource rent tax (MRRT) of 50% was either necessary or justifiable under the present Indian iron-ore mining business environment.

The Ministry official said that royalties and rent were already being collected from miners in India, and called the windfall tax proposal a “closed chapter”.

The Mines and Minerals Development and Regulation Bill, which had been approved by the Indian Cabinet and was awaiting approval by Parliament, would address most of the issues and demands of the iron-ore-rich provinces relating to revenue maximisation from the mining sector, the official added.

The royalty rates on minerals were revised three years ago and the process for another round of revision was currently being undertaken, which would ensure higher and more equitable sharing of revenue from the sector, the official said.

The last revision of the mineral royalty rates was effected in 2009, and resulted in the near doubling of revenues to the government from $415-million in 2008/09 to $800-million in 2009/10. A repeat performance was expected following another round of revision.

However, in response to the Mines Ministry seeking comments on draft royalty proposals, several of the mineral-rich provinces, such as Orissa, Jharkhand and Chattisgarh, opposed the new rates on the grounds that the rates were not in tune with super profits made by miners, and were not equitable as far as revenue collections of the provincial governments were concerned.

The provincial government of Orissa, in eastern India, unhappy with the proposed royalty rates, had demanded a levy of 50% of surplus rent on iron-ore along the lines of the 30% imposed under the MRRT in Australia, which should go exclusively to the kitty of the provincial governments.

There were currently 51 minerals included in the schedule of the Mining and Mineral Development Regulation Act, with differing rates of royalty for each mineral. The current royalty rate for iron-ore was 10%.