Naveen seeks PM intervention on MRRT issue

Bhubaneswar: Expressing `surprise` over Mines Ministry`s stand on the windfall profits made by iron ore mining companies, Chief Minister Naveen Patnaik on Wednesday again sought Prime Minister`s immediate intervention on the issue of imposition of Mineral Resource Rent Tax (MRRT).

"That windfall profits are being made by iron ore mining companies is a ubiquitous fact and known to everyone, not only in India but globally. I was, and remain, rather puzzled by the ambivalence of the Ministry of Mines on this well known fact," Patnaik wrote in a letter to Prime Minister Manmohan Singh.

Patnaik`s letter was in response to a recent letter of Union Mines Minister Dinsha Patel who rejected the idea of imposing MRRT on iron ore at the rate of 50 per cent of the surplus rent on account of the super normal profits being made by mines owners.

Justifying his claim that iron ore mines owners were making super normal profit, Patnaik said: "The ministry, I am sure, must be having data on profits being made in the iron ore mining sector."

Stating that the prices of iron ore both in the domestic and international market have increased more than 10 fold in the past decade, Patnaik said the situation has led to unprecedented returns for the iron ore mining industry.

"Companies were making normal profit commensurate with the risk involved in the activity in 2000-01. And, now they are earning average profits, on conservative estimate, to the tune of Rs 2,000–Rs 3,500 and even higher per metric ton of iron ore in case of sale in the domestic market," he said.

The Centre in an indirect way acknowledged the surplus profits available and was already mopping up rents through imposition of 30 per cent export duty and differential rail freight on iron ore export, he added.

"In Odisha, over Rs 4,000 per ton was and is being collected by the central government on iron ore fine export of 63 per cent Fe content. This illustrates the rents available as the mine owners still find it profitable to export in spite of high freight and custom duty," Patnaik said.

The state government on the other hand received a paltry Rs 200 per tonne as royalty on fines, the chief minister said in the letter. Patnaik also cited some Supreme Court verdicts while claiming that natural resources could not be used in the interest of private companies.

"I am, therefore, constrained to point out that the stand taken by the Ministry of Mines is contrary to the facts available regarding super normal profits in iron ore mining and appears to be in the interest of a handful of private mining companies alone," the chief minister said.

Patnaik also said that since the mineral deposits were found in tribal dominated areas, it would be wise to spend the additional earning as MRRT for the welbeing of tribals.

This was fifth letter of the Odisha Chief Minister to the Centre demanding imposition of the MRRT.