Karnataka sees buoyancy in royalty from minerals

Mining money

The Karnataka government has seen buoyancy in the collection of royalty from the sale of minerals during the first eight months of the current financial year. The state has raked in royalty revenue of Rs 2,278 crore from the sale of minerals till November 2019 and thereby achieved 64% of the annual target.

Of the total royalty collections achieved till November 2019, the state earned Rs 1,311 crore from major minerals and Rs 967 crore from minor minerals. Among the major minerals, iron ore accounts for 52% of the total royalty collections at Rs 683 crore.

The share of iron ore in the total royalty collections stands at 30%, according to the Economic Survey of Karnataka 2019-20, which was tabled in the state legislative assembly last week.

Going by the figures available till November 2019, the state is likely to witness a record collection of royalty revenue from the sale of iron ore by the end of the current fiscal ending March 2020.

During the current fiscal (up to November 2019), the state witnessed e-auction of 19.97 million metric tons of iron ore valued at Rs 4,684 crore. During the entire fiscal ended March 2019, royalty revenue collected from iron ore stood at Rs 593 crore on a total sale of 16.86 million metric tons valued at Rs 4,267 crore. In 2017-18, the state earned royalty revenue of Rs 611.52 crore from the sale of 17.86 million metric tons of iron ore valued at Rs 4,030 crore, the Economic Survey data reveals.

For the year ended March 2019, the royalty collections from all minerals stood at Rs 3,026 crore compared to Rs 2,746 crore in the previous year, a year-on-year growth of 10.2%. During the fiscal ended March 2019, the government earned Rs 1,406 crore from major minerals and Rs 1,621 crore from minor minerals.

The Department of Mines and Geology levies royalty charges at 15% of the sale value of the mineral. Major minerals such as iron ore is sold through the e-auction route under the strict supervision of the Monitoring Committee appointed by the Supreme Court. The system is in place since 2011.

Karnataka has rich mineral deposits covering around 1.92 lakh sq. km of iron ore and manganese in Ballari, Chitradurga, Tumakuru, Uttara Kannada and Chikkamagaluru districts, chromium deposits in Hassan and Mysuru districts. Besides these ores, the state also has deposits of aluminium in Belagavi, copper in Hassan, Chitradurga and Raichur districts.

Expiry of leases

As many as 44 iron ore mining leases are going to expire by March 31, 2020. These mining leases should be disposed through auction. Accordingly, four mining leases have already been auctioned in 2019-20. Of these four, three leases have been won by JSW Steel Limited and the other lease was won by MSPL Limited.

The iron ore reserves from these four mining leases are estimated at 98 million metric tons. The Department of Mines and Geology has already issued a letter of intent to the successful bidders.