Mining Industry is in danger – Part-6

The royalty rate also very high in India compared to other mineral rich countries.

International Comparison of Minerals Specific Royalty Rates: 2012


Country Iron Ore Coal Copper Gold
Australia 6.5%-7.5% 7%-10% 2.7%-3.5% 0% – 2.5%
Brazil 2% 2% 2.02% 1%
Ghana 5% 5% 5% 5%
India 15%* 14%* 4.20% 2%
Indonesia 3% 3%-7% 4% 3.75%
Kazakhstan 2.8% 0% 5.7% 5%
Philippines Min 5% Min 5% Min 5% Min 5%
Russia 4.8% 11-57/tonne 8% 6%
South Africa 0.5% – 7% 0.5% – 7% 0.5% – 7% 0.5% – 5%
United States 2%-5% 2%-5% 2%-5% 2%-5%

Source: (Basic data), PricewaterhouseCoopers, 2012 and Ministry of Mines, Government of India (2014)

* Recent Rates, 2014

Mining Industry is in danger – Part-5

The Corporate Income Tax rates in India are very high compared to the other major mining countries. The effective tax rate is around 34.61% for income exceeding Rs. 100 million for the domestic company and for the foreign company the rate is 43.26% (KPMG, 2015). A minimum alternative tax (MAT) is levied at 18.5% of the adjusted profit of the companies where the tax payable is less than 18.5% of their book value.  The government has also started charging “carbon tax” which would add to the percentage furthermore.

Mining sector is capital intensive and utilizes specialised mine equipment that is usually imported.  Higher import duty on mine equipment has a direct negative impact on mine projects, especially in the initial years of the mine project.  Even the royalty rates in India are at the highest level. The rate of royalties on iron ore is 15% and that on coal is 14% which is way more than the other countries of the world .

       International Comparison of Corporate Tax Rates: 2015

 Country Corporate Tax Rate
Argentina 35%
Australia 30%
Brazil 34%
Canada 26.5%
Chile 22.5%
China 25%
Germany 29.65%
India 34.61%
Indonesia 25%
Mexico 30%
Peru 30%
Philippines 30%
Russia 20%
South Africa 28%
Tanzania 30%
Ukraine 18%
United Kingdom 23%
United States 40%


Mining Industry is in danger – Part-4

The Risk involved in Mining has shifted towards Mining Business and Return towards Government.

The case was other way around few years back as shown in the figure below:

From the above mentioned, facts it is very clear that the margin for doing Business in Mining has been substantially reduced. It would be an impetus for Indian Mining Industry if the overall taxation is reduced to around 40% (Global Average).It may also be mentioned that after the enactment of the amended act, out of 42 mines only one dozen mines could be allocated through auction. No fresh mine has come to the production as of now.

Mining Industry is in danger – Part-3

After amendment of new mining law,  the overall tax rate is increased.

 Graph showing increase in overall Taxation after enactment of MMDR Amendment Act, 2015

Mining Industry is in danger – Part-2

Table Showing Direct and Indirect Taxes paid by Mine owners -Effective Tax Rate (ETR):

All over the world, in India alone approximately 59.8% of total revenue has to be paid to Govt., by way of various tax by the existing mine owners and 64% by the new mine owners. The comparison chart is given below.


Mining Industry is in danger – Part-1

In the world Except water, food, and timber all products are from minerals. Unless, the mining operation is not going there is no development for human being.  For the reasons best known to them, some people protest the mining activity. On going through the draft mining report prepared by FICCI the following facts are came to light.

High Taxation on Minerals: Pre and Post enactment of MMDR (Amendment) Act 2015

 Mine owners have to pay a mix of other Direct and Indirect taxes administered by different authorities. The same has been furnished in the table below:


Beach Mineral Producer Association got approval from National Accreditation Board for Education and Training (NABET)

Certificate is given below.