India is working on a new formula to set iron ore prices. The Ministry of Mines has pointed out that some iron ore miners are trying to keep prices low to pay lower royalties.
In response, the government has formed a panel to come up with an alternative mechanism to determine domestic iron ore prices. "Any unconscionable reduction in the average selling price of iron ore will affect the revenue accruing to the government through auction premium and royalty," the government statement said.
Currently, the government imposes a uniform tax of 15%. India is the world's fourth largest iron ore producer and the largest exporter of the ore. The panel will examine the current pricing mechanism of India's largest iron ore producers. The panel feels that even the prices of ore of the same grade differ, making it easier for miners to avoid lower royalty payments by lowering prices.