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In what could set off yet another round of tussle with the Centre, the state government has declined to accept a provision dealing with royalty charges on minerals in the Mineral Concession Rules 1960. Official sources said the MCR provides that states can levy royalty on minerals which are processed within the leasehold area of a mine. The state government, however, is keen to collect royalty on the mineral produced and not after it was processed within the leasehold area, sources said. Currently, royalty is collected at 10 per cent of the selling price after processing. The state government, in reply to a communique from the Union mines ministry, has said mineral extracted from the pit's mouth is in many cases gets processed within the lease area, resulting in iron ore lumps turning into calibrated lump ore and fines. Such processing maximizes profits because the prices of CLO being more than fines the mining leaseholders pay less royalty. This, the state government feels, should be changed and royalty be charged based on cost of CLO extracted from the leased area. Industry sources said CLO having 62% iron content is presently being sold between INR 6000 and INR 7000 per ton while iron ore fines of similar grade cost between INR 2000 and INR 3000 per tonne. An officer added that "By collecting royalty based on CLO extraction, the state government could earn more revenue than the current system.”