In Short:
India’s largest iron-ore miner, NMDC Ltd, expects minimal impact from a Supreme Court ruling allowing states to charge retrospective royalties on minerals. Chairman Amitava Mukherjee stated they can pass these costs to existing customers. Currently, no states have demanded such payments. NMDC’s liabilities related to retrospective taxes are around ₹21-24 crore for diamond mining but mostly manageable through customer agreements.
NMDC’s Response to Supreme Court Verdict
In a recent conversation with businessline, **Amitava Mukherjee**, the Chairman and Managing Director (additional charge) of **NMDC Ltd**, shared the company’s outlook following the Supreme Court’s decision that permits states to retrospectively impose royalty on minerals extracted from their territories. Mukherjee expressed confidence, stating that the impact on the largest iron-ore miner in **India** would be “minimal.”
Minimal Impact Expected
According to Mukherjee, even if states decide to implement these charges, the company anticipates that there will be a “pass through.” This means any additional costs would likely be passed on to existing customers. As of now, no state government has made formal demands for retrospective royalty payments.
“We do not see any significant impact from the Supreme Court order; in fact, we expect minimal repercussions, if any,” he commented, emphasizing that being a merchant miner reduces their overall risk. This statement came during an event organized by **FICCI**.
Details on Tax Liabilities
Merchant miners, like NMDC, have some flexibility to recover tax costs from their customers, assuming those customers are still operational. However, if a customer has closed up shop, the tax burden would fall on the miner.
NMDC currently operates iron ore mines in **Chhattisgarh** and **Karnataka**, alongside diamond mining operations in **Panna, Madhya Pradesh**.
Mukherjee noted that out of **81 cases** reviewed by the Supreme Court, only one pertains to NMDC. The company estimates a potential financial impact of around ₹21-24 crore linked to its diamond mining at Panna. “If the principle of retrospective taxation is enforced, we might face a tax liability of ₹24 crore for our operations in Panna. Beyond that, it’s mostly manageable,” he explained.
Notably, **NMDC’s** clientele includes renowned companies such as **ArcelorMittal Nippon Steel (India)**, **JSW Steel**, **Jindal Steel and Power**, and **Kalyani Steel**, among others.
Current Status of Royalty Demands
Operating four iron ore mines across **Chhattisgarh** and **Karnataka**, **NMDC** is currently in a wait-and-see mode as neither state has proposed any new laws or issued demand notices regarding retrospective royalties. “We have not received any requests from these states yet,” added Mukherjee.
Legal Tussle
Mukherjee also shed light on the ongoing legal disputes **NMDC** faces with the state governments, noting that these concerns revolve around “separate issues,” including additional levies, increased royalties, and conditions for lease renewals.
Currently, **NMDC** holds a tax liability exceeding ₹2,000 crore for **Karnataka** and ₹144 crore for **Chhattisgarh**. “Once the legal principles are settled, we might eventually see liabilities for both states as well,” Mukherjee remarked during a recent call following the company’s results announcement.
In **Chhattisgarh**, the company is already in the process of recovering dues, so Mukherjee believes the retrospective impact there will be minimal. “Karnataka, however, could be more significant,” he warned.
“Most of our customers have remained unchanged for the past 20 years. Therefore, we feel confident that a substantial portion of any payable amount can be recovered,” he concluded.
