National Mineral Policy 2006 - Department of Mines

ase metals are often taxed at a lower rate than low-value bulk commodities like sand andgravel, reflecting the fact that investment in base metals is highly dependent on foreigninvestors who have many countries to choose from when making their investment decisions,compared to sand and gravel, where mainly domestic investors are active. Governments mayalso adjust their tax systems in an attempt to impose higher taxes on minerals, such asdiamonds, which are expected to generate higher profit levels. In fact, in addition to advalorem royalty, profit based royalty may also be imposed on a diamond mine in order to geta better share of revenues from such ventures.6.16 Judged from the angle of internationally competitive royalty rates there would appearto be scope for upward revision only in a few minerals such as manganese ore and iron ore.In several products, the Indian royalty rates are higher than those of other countries. Thisdoes not necessarily mean that the rates should be considered for lowering, as thecomparative cost of mining operations in India should also be taken into account. Only inthose cases in which there is evidence that the rates are inhibiting mining operations shouldsuch a step be considered.6.17 When rates are fixed in ad valorem terms the question arises as to how the value ofthe mineral should be determined for applying the percentage rates. Box 6.1 gives themethods of valuation in vogue in Western Australia, for which full details of the practice areavailable.127