The Centre’s decision mandating miners to contribute a certain percentage of their royalty to the District Mineral Foundation has got the domestic metals industry worried.

At a time when cheaper imports have brought down the prices of most metal products, the added outgo for the DMF will now push up their input costs, say industry players.

On Thursday, the government notified that existing miners will need to pay 30 per cent of the royalty to the DMF, while miners winning leases in auctions will have to pay 10 per cent of the royalty.

For producers such as Tata Steel and Steel Authority of India which have captive mines, this move will push up their input costs and comes just days after the imposition of a safeguard duty. “The DMF will increase input costs. By implementing it effective January 12, it would mean the added cost for January till August cannot be passed on to consumers and it will be a one-time hit for existing miners,” Chankaya Chaudhary, Group Director, Corporate Communications and Regulatory Affairs, Tata Steel, told BusinessLine .

The impact will also raise costs for those buying iron ore from public sector unit NMDC, which is expected to pass on the costs. The Federation of Indian Mineral Industries also expects mineral prices to rise. This is despite the global trend of weaker prices.

“International and domestic prices of mineral commodities have nosedived and the Indian mining industry is already the highest taxed in the world in terms of royalty and other taxes,” said H Noor Ahmed, President, FIMI, adding that any increase in taxes and royalties would lead to higher prices of the end-product.

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