The Uranium Corporation of India (UCIL), the only company engaged in mining of uranium in the country, would now have to pay 2 per cent of the compensation it receives for selling uranium to the Nuclear Power Corporation of India Limited — the sole consumer of uranium in India — as royalty, which will be distributed to the state governments in proportion to the amount of mineral mined from each one of them.

As of now, uranium is mined only from Jharkhand, which has four underground and one open-pit mine. The royalty currently paid to Jharkhand is calculated by a complicated methodology based on the quality of uranium ore mined. Jharkhand had complained that it was gaining very little by way of royalty and requested for an upward revision of the rates.

A study group was constituted by the Centre to review the royalty rates not just for uranium but all the other minerals as well. Based on the recommendations of the study group, the Cabinet Committee on Economic Affairs on Friday decided to fix the royalty at flat 2 per cent of the compensation received by UCIL. The Government said in a statement that royalty rates for other minerals would also be revised soon. The decision on uranium was taken immediately considering the fact that it was a strategic mineral and the mining operation was restricted to the public sector, it said.

The new simplified system of calculating the royalty takes into account the fact that mining of uranium is due to start in some other states as well in the next few years. Work is ongoing to start mining operations in Kadappa district of Andhra Pradesh. UCIL hopes to make this mine functional in the next couple of years. Two additional underground mines in Jharkhand and one in Karnataka are to follow suit. In due course, UCIL also hopes to begin mining in Meghalaya, which has huge reserves of uranium but where mining has not been able to take off because of strong resistance from the local population.