Bhubaneswar, Sept. 3: Chief minister Naveen Patnaik today urged the Centre to revise the royalty on minerals and impose a mineral resource tax on iron ore in view of the boom in the export market.

Naveen has been repeatedly demanding the revision of royalty on minerals and fixing of royalty on an ad valorem basis while highlighting the Centre’s alleged neglect of Orissa.

However, in his letter Naveen said nothing about the issue of captive mines to which Opposition leaders, including Union chemicals and fertilisers minister Srikant Jena, have repeatedly drawn the government’s attention.

The Hota committee, too, supported the view that private companies should not be given captive mines saying all mines should be handed over to the state-run Orissa Mining Corporation (OMC).

In a letter to Prime Minister Manmohan Singh today, Naveen said: “The insatiable demand for iron ore in the export market has resulted in iron ore becoming a highly profitable commodity with returns from mining being far in excess of economically acceptable rates. In less than a decade, iron ore prices have increased more than tenfold.”

The supernormal profits being made are evident from the audited operational profits of 80 per cent of the sales revenue from iron ore mining, which is unheard of in any other industry, he said.

Expressing concern about the “huge profits accruing to merchant mining companies”, a large number of which are in private hands, Naveen said: “It is important that the supernormal profits from natural resources do not go to few hands and the community gets a fair return for them.”

Pointing at the meagre rate of royalty on iron ore (10 per cent of the sale value), the chief minister reiterated his demand for revising the royalty on minerals.

Naveen also suggested imposition of mineral resource tax on iron ore, on the lines of Australia.

“The Australian government has announced that a mineral resource rent tax of 30 per cent on ore will be applicable from July 1, 2012. On the same lines, a mineral resources rent tax should be levied on iron ore to be charged at 50 per cent of the surplus rent and should accrue to the states,” he said.

The additional royalty and mineral resource tax would enable the state to invest in improving social and physical infrastructure and strengthening welfare measures, said Naveen.

Though Naveen expressed concern about the “huge profits” being made by private mining companies, he, was, however silent on the issue of nationalisation of mineral resources.

Recently, Sanjeeb Hota Committee, appointed by the state government to suggest measures for strengthening state’s finance, had recommended the leasing out of all mines to Orissa Mining Corporation (OMC) instead of handing these resources as captive property to corporate houses.

In order to augment the state’s revenue resources, the committee suggested that in future, all mines containing important minerals be leased out to the OMC instead of being allotted to private operators including mineral-based industries signing MoU with the state government.

The committee suggested that MoUs should not envisage leasing of any minerals to the industry, it should instead stipulate that mines be leased out to OMC and the latter would supply the required quantity of minerals to the industry at a mutually agreed price. “Selling of minerals by OMC to the industry would attract VAT and would increase the proceeds of the VAT which is not possible if captive mines are granted in favour of the mineral-based industries,” the report said.

In order to be assured of the supply of mineral ore, industrial units could execute a MoU with OMC that would stipulate the quantum of minerals to be supplied to the industry by the OMC within a definite period. The OMC would be strengthened by deploying efficient technical personnel. It would have a core team of technical consultants to aid and advise the state government.

“The state government would ensure the discharging of corporate responsibility to the people and the region where these mines are located and operated by OMC, in future,” the report said.

Earlier, Union minister for chemical and fertilizers Srikant Jena had also written to the chief minister suggesting that all mineral reserves should be kept in the hands of the state-owned OMC.