NMDC chief flags no impact from minerals tax, says customers to foot the bill

As of now, NMDC has a liability of over Rs 2,000 crore towards the state of Karnaraka and Rs 144 crore towards the states of Chattisgarh, but Mukherjee adds that a "very substantial amount" of these liabilities will be recovered through customers.

Aishwarya Nair

August 16, 2024 / 18:17 IST

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State-owned, National Mineral Development Corp (NMDC) sees no material impact from the latest Supreme Court verdict allowing states to retrospectively levy royalty on mines and minerals extracted from their land, Managing Director (additional charge) Amitava Mukherjee, said in a post earnings call on August 16. Mukherjee added that if states come up with such charges, it will be recovered from existing customers.

NMDC, which is the country's largest iron ore producer, counts Arcelor Mittal Nippon Steel (India), JSW Steel , Jindal Steel and Power, Angul, Kalyani Steel Ltd as its customers. "We are still accessing impact but since we are merchant miners, we can recover it from customers. Our customers base has also not changed of that period, so net effect is negligiable," Mukherjee said.

The miner operates four iron ore mines in Chhattisgarh and Karnataka states. Although these states are yet to come up with such a law, NMDC is involved in a legal tussle with both the states, over issues such as imposition of additional levies. higher royalties and lease renewal conditions. Both disputes are separate from the set of 82 cases which legally challenged state authority to impose such taxes, according to Mukherjee.

The Supreme Court delivered a crucial judgment earlier this week on tax on mining companies, ruling that states can collect previous dues on royalty and tax on mineral-bearing land, retrospectively. Over the years, more than 80 petitions have been filed challenging the interpretation of royalties under the MMDR Act.

"Among these cases, NMDC had just one case regarding our diamond mining in Panna (in Madhya Pradesh) and the dues for that would be Rs 21 crore, We will try and recover that but not very hopeful about it," Mukherjee added. As of now, NMDC has a liability of over Rs 2,000 crore towards the state of Karnaraka and Rs 144 crore towards the states of Chattisgarh, but Mukherjee adds that a "very substantial amount" of these liabilities will be recovered through customers.