Following is from http://pib.nic.in/release/release.asp?relid=46319.

The CCEA has approved the revision of the rates of royalty for uranium as per recommendations of the Study Group. Accordingly, royalty rates for Uranium would be levied on ad-valorem basis on the basis of compensation amount paid to the Uranium Corporation of India Limited (UCIL), at the rate of 2% of the compensation amount received by the UCIL, to be apportioned on state wise basis as per the details provided by the Department of Atomic Energy.

The Government has taken several initiatives to streamline exploration and mining of mineral Uranium in the country. One of the issues pertained to providing a fair compensation tot he State Governments for the mineral mined out from their territory. While the Government is working out a proposal for revision of royalty rates for all minerals, a considered decision has been taken to enhance the royalty rates of mineral Uranium immediately, keeping the fact in view that uranium is a strategic mineral and mining operations in this sector is restricted to Public Sector only. Royalty on minerals is payable to the State Governments by a holder of a mining lease in respect of any mineral removed or consumed by him from the leased area.

In terms of the provisions of the Mines and Minerals (Development and Regulation) Act, 1957, the rates of royalty can not be enhanced more than once in a period of three years. The existing rates of royalty for minerals including Uranium, other than minor minerals, coal, lignite of royalty for Uranium can be enhanced any-time after 14.10.2007.

In order to review the rates of royalty and dead rent the Government constituted a Study Group under the Chairmanship of the Additional Secretary (Mines) with the representatives of the State Governments of Chhattisgarh, Jharkhand, Karnataka, Orissa, Rajasthan, Ministry of Steel, Department of Atomic Energy, Indian Bureau of Mines, and the Federation of Indian Mineral Industries as members. The Study Group noted that the details on domestic production and domestic pricing of uranium are not available in public domain. Further the mining operations of uranium are exclusively done by public sector, with limited captive use. Thus for the sake of transparency, the Study Group recommended that the compensation paid by the Government to the public sector undertakings involved in mining and processing of uranium, would be used as the reference point for determining royalty payable to the State Governments.

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AD/SH/LV

Following is an excerpt from New Indian Express on this.

… Chief Minister Naveen Patnaik has demanded that the royalty be fixed on ad valorem basis.

In a letter to Prime Minister Manmohan Singh, the Chief Minister said that the manner in which the Centre is going to revise the royalty, the State will be a loser. The State has already sustained a huge loss because of two-year delay in the revision.

He urged the Prime Minister to compensate the revenue loss of the State and delete the provision of adjusting the cess collected by the State during payment of royalty. As per the Supreme Court ruling, the collection of cess by the State for the development of the people in the mining areas is justified, he argued.

Under the new ‘hybrid formula,’ the State will get Rs 10 more per tonne of coal which is nothing given the delay in the revision of royalty, he said.

As per the Mines and Mineral (Development and Regulation) Act, 1957, the Centre is bound to revise royalty on coal and other minerals every three years. The Act provides that the State should be compensated accordingly for the delay in revision of royalty.

The latest revision was made on August 1 after five years, the Chief Minister reminded and urged the Prime Minister to compensate the State for the last two years.

I wonder if Naveen is referring to the supreme court judgment regarding Vedanta where the supreme court asks Vedanta to give 5% of its profits for spending towards tribal development and environmental safe guards.