Cabinet approves royalty rates for 12 critical minerals

New Delhi: The Cabinet has approved on Thursday the rates of royalty for 12 critical and strategic minerals — Beryllium, Cadmium, Cobalt, Gallium, Indium, Rhenium, Selenium, Tantalum, Tellurium, Titanium, Tungsten and Vanadium. “The Union Cabinet chaired by Prime Minister Shri Narendra Modi approved the amendment of Second Schedule to the Mines and Minerals (Development and Regulation) Act, 1957 ('MMDR Act') for specifying rate of royalty in respect of 12 critical and strategic minerals…,” said an official statement.

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Royalty rates for all 24 critical minerals finalised

This completes the exercise of the rationalisation of royalty rates for all 24 critical and strategic minerals. Earlier, the government had notified the royalty rate of four critical minerals — Glauconite, Potash, Molybdenum and Platinum Group of Minerals — on March 15, 2022 and of three critical minerals — Lithium, Niobium and Rare Earth Elements — on October 12, 2023.

Recently, the Mines and Minerals (Development and Regulation) Amendment Act, 2023, which has come into force on August 17, 2023, had listed 24 critical and strategic minerals in Part D of the First Schedule of the MMDR Act. The amendment provided that mining lease and composite licence of these 24 minerals shall be auctioned by the Central government.

“Today’s approval of the Union Cabinet for specification of rate of royalty will enable the Central Government to auction blocks for these 12 minerals for the first time in the country. Royalty rate on minerals is an important financial consideration for the bidders in the auction of blocks. Further, the manner for calculation of average sale price (ASP) of these minerals has also been prepared by the Ministry of Mines which will enable determination of bid parameters,” said the statement.

Royalty rates for critical minerals

The royalty rate for Beryllium, Indium, Rhenium, Tellurium will be 2 percent of the ASP of relevant metal chargeable on the relevant metal contained in the ore produced. The rates for Cadmium, Cobalt, Gallium, Selenium, Tantalum (produced from ores other than Columbite-tantalite) and Titanium (produced from ores other than occurring in Beach Sand Minerals) produced as a primary product will be 4 percent, while for those minerals as a by-product will be 2 percent.

Tungsten will have a royalty rate of 3 percent, Vanadium, as a primary product will be 4 percent and as a by-product will be 2 percent.

“The Second Schedule of the MMDR Act provides royalty rates for various minerals. Item No. 55 of the Second Schedule provides that royalty rate for the minerals whose royalty rate is not specifically provided therein shall be 12 percent of the Average Sale Price (ASP). Thus, if the royalty rate for these is not specifically provided, then their default royalty rate would be 12 percent of ASP, which is considerably high as compared to other critical and strategic minerals. Also, this royalty rate of 12 percent is not comparable with other mineral producing countries. Thus, it is decided to specify a reasonable royalty rate,” said the government.

Critical minerals such as Cadmium, Cobalt, Gallium, Indium, Sellenium and Vanadium and have uses in batteries, semiconductors, solar panels, etc. These minerals have gained significance in view of India’s commitment towards energy transition and achieving net-zero emission by 2070. Minerals like Beryllium, Titanium, Tungsten, Tantalum, etc have usage in new technologies, electronics and defence equipment. Encouraging indigenous mining would lead to a reduction in imports and the setting up of related industries and infrastructure projects.

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