Cement prices likely to rise due to new mineral tax by states – Report

Chennai Chennai: State governments may impose new mineral taxes following the Supreme Court ruling, which is likely to lead to a hike in cement prices across various states, reports JM Financial. Following the Supreme Court ruling in July 2024, which allowed states to levy taxes on mineral rights and mineral-rich lands in addition to royalty, Tamil Nadu has introduced the Tamil Nadu Mineral-rich Land Tax Act, 2024.

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Under this law, an additional tax of Rs 160 per tonne on limestone mining will be effective from February 20, 2025. With similar measures being considered by other mineral-rich states, including Karnataka, cement companies are expected to raise prices to compensate for the rising costs. Advertisement The new tax is expected to significantly impact cement manufacturers operating in Tamil Nadu. Since limestone is a key raw material in cement production, the additional tax will increase the cost of manufacturing, forcing companies to consider price hikes to maintain profitability. To offset the cost impact, cement prices in Tamil Nadu are expected to rise by Rs 8-10 per bag. Over the past few years, cement prices in the state have been under pressure due to intense market competition.

However, with this new tax burden, companies may have no choice but to pass on the additional cost to consumers through price hikes. Industry experts believe Tamil Nadu’s move could set a precedent for other mineral-rich states to impose similar taxes.

The Karnataka government is already in discussions about a possible mineral tax, and other states with significant limestone reserves could follow suit. If more states impose such taxes, the government will be able to raise the price of cement.