Naveen Patnaik and Manmohan Singh

Bhubaneswar, May 2: Chief minister Naveen Patnaik today contradicted the Centre’s stand on the issue of imposition of a mineral resource rent tax on iron ore, accusing it of serving “the interest of private mining companies”.

“The stand taken by the mines ministry is contrary to the facts available regarding super normal profits in iron ore mining and appears to be in the interest of handful of private mining companies alone,” said Naveen in his letter to Prime Minister Manmohan Singh today.

In the letter Naveen also mentioned that windfall profits being made by iron ore mining companies was 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,” Naveen mentioned in the letter.

Urging the Prime Minister to personally review the matter, the chief minister requested him to ensure that the Union government “acts immediately”.

Naveen has repeatedly been demanding levy of mineral resources rent tax on iron ore to be charged at 50 per cent of the surplus rent on account of the “super normal profits being made by the mine owners”.

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

Earlier, union steel minister Dinsha Patel had stated in his letter to the chief minister on January 3 last that “the matter whether the iron ore mining industry is earning super profits to the detriment of the state government may need closer look”.

On January 25, Naveen wrote back highlighting the quantum of profits being generated in the sector. He stated that the prices of iron ore, both in the domestic and international market, have increased more than ten fold in the last decade leading to unprecedented returns for the iron ore mining industry.

However, the union minister wrote on April 24 last: “Study of the profits earned by various types of miners in iron ore mining, including the small and medium scale miners and captive miners, is necessary in light of the various incidence of taxes and levies on the mining sector.”

“It may not be prudent to generalise that the entire mining sector is earning profits to the scale equivalent to National Mines Development Corporation, considering that it is enjoying high grade deposits,” observed Patel in his letter.

Expressing his displeasure with the Centre’s stand, Naveen said: “While the Union government is continuing in its state of denial, the Australian Parliament has taken the path of action and passed a legislation on March 19 last for imposition of mining tax on iron ore and coal.”

Reiterating his demand for imposition of mineral resources rent tax, Naveen said in his letter to the Prime Minister: “The funds so generated should accrue to the state government for investing in infrastructure and jobs and sharing the benefits with the community.”

Naveen also cited some Supreme Court verdicts while claiming that natural resources could not be used in the interest of private companies.

He also said that since the mineral deposits were found in tribal dominated areas, it would be wise to spend the additional earning as mineral resource rent tax for the well being of tribals.