India Mulls Market-Based Royalties for Iron Ore Miners

22 June 2009 (Last Updated June 22nd, 2009 18:30)

India’s mining minister has said he is considering linking royalties paid on iron ore by miners to market prices and scraping the fixed rate system. State governments have been asking the central government to raise the royalties but any such move will harm their competitiveness in the

India’s mining minister has said he is considering linking royalties paid on iron ore by miners to market prices and scraping the fixed rate system.

State governments have been asking the central government to raise the royalties but any such move will harm their competitiveness in the export business, analysts told Reuters.

Mines Minister BK Handique did not give a specific figure for the royalty but it is thought to be about 10% of the sale cost before freight costs, Reuters reported.

The implementation of new royalty rates, based on the recommendations of a panel in 2007, has been delayed due to the global downturn resulting in weak iron ore prices and sales.

The proposal awaits the decision of a panel of ministers.