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Indian mine ministry pushes for new iron ore royalty mechanism

India’s mines ministry will push for a new system of calculating royalties instead of the current practice of basing it on an average price determined by the Indian Bureau of Mines.

Under the new method, pithead prices, on which royalty is based, will be discovered from iron prices across the supply chain.

The ministry said that this proposal, which is unlikely to raise royalty collections for states, will be taken up by its study group later this week.

In its report on illegal mining in Karnataka, the state Lokayukta had criticized the practice of using the state wise average prices put out by the bureau, saying that it lead to lower royalty collections. The Lokayukta had found that the bureau's weighted average pitmouth value of ore, to be collected from the top 10 non captive producers, did not accurately reflect market price of iron ore.