Govt plans royalty relief for SAIL, RINL on low-grade ore

New Delhi: Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) are headed for a double bonanza as the government plans to slash royalty on beneficiated low-grade iron ore to 5 per cent and exempt them from additional payments under the Sixth Schedule, if they pay royalty under the Fifth Schedule.

“When low grade hematite ore with less than 58 per cent iron content is beneficiated to 62 per cent iron content or above, the royalty would be levied at 5 per cent of the average selling price,” said an official. Currently, there is one royalty rate of 15 per cent on all grades of iron ore across the sector.

He said the royalty cut for all steel manufacturers follows Standing Committee on Coal & Steel’s observation that beneficiation, followed by agglomeration, would not only conserve the limited high-grade ore but also make it possible for optimum utilisation of the available rejects thereby reducing the burden of stacking tailings and rejects kept for disposal.

It would enhance the resource base of iron ore in the country through continuous exploration as well as promote the utilization of low and lean grade ores, mine rejects, plant tailings, etc. The closing stock of iron ore with less than 58 percent iron content was 30.71 million tonnes in 2023-24 of which one-third was lying in captive mines of SAIL, he said.

Another key change which would alleviate financial burden of SAIL and RINL is the proposed exemption to government companies from additional payments under the Sixth Schedule if they pay under the Fifth Schedule.

Currently, a government company which has got extension of its mining lease period beyond 50 years or has been granted mining lease after 2015 is required to make additional payment as specified under the Fifth Schedule. Further, a government company with captive mine lease is required to make an additional payment as under the Sixth Schedule for sale of minerals.

Steel Ministry’s contention was that in certain cases government companies with captive lease make payments under both Schedules resulting in cumulative additional levy of 300 per cent of royalty for iron ore fines and 400 per cent of iron ore lumps, which impacts their cost competitiveness in the open market. Iron ore is crucial for the iron and steel industry, significantly impacting economic status and development of the country which has over 35.29 billion tonnes of hematite and magnetite resources, making it a leading producer.

However, per capita steel consumption in India is around 69 kg, compared to the global average of 208 kg and the domestic steelmaking capacity is expected to reach 300 million tonnes by 2030-31. “Enhancing our resource base and utilizing the low-grade ores becomes essential to meet the future demand,” the official said.

The ASP or average selling price for computing the royalty would also be changed whereby ASP would be taken as 50 percent of lowest grade of hematite for below 35 per cent iron grade and as 75 per cent for grade between 35-45 per cent iron.