Cabinet Approves Royalty Rates for Mining of 12 Critical and Strategic Minerals

The royalty rates for 12 essential and strategic minerals--beryllium, cadmium, cobalt, gallium, indium, rhenium, selenium, tantalum, tellurium, titanium, tungsten and vanadium--were approved by the Union Cabinet on Thursday.

New Delhi:The Union Cabinet on Thursday approved the royalty rates for 12 critical and strategic minerals--beryllium, cadmium, cobalt, gallium, indium, rhenium, selenium, tantalum, tellurium, titanium, tungsten and vanadium--according to an official statement issued after the meeting, this completes the exercise of the rationalisation of royalty rates for all 24 critical and strategic minerals.

The government had earlier notified the royalty rate of four critical minerals: glauconite, potash, molybdenum and platinum group minerals on March 15, 2022, and of three critical minerals viz., lithium, niobium and rare earth elements on October 12, 2023. Critical minerals are used for making high-tech products ranging from solar panels to semiconductors and wind turbines to advanced batteries for storage and transportation.

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

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

The Second Schedule of the MMDR Act provides royalty rates for various minerals. Item no 55 provides that the royalty rate for the minerals whose royalty rate is not specifically provided therein shall be 12 per cent 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 per cent of ASP, which is considerably high as compared to other critical and strategic minerals.

Also, this royalty rate of 12 per cent is not comparable with other mineral-producing countries. The approved rates are Beryllium, indium, rhenium, and tellurium: 2 per cent of the ASP of relevant metal chargeable on the relevant metal contained in the ore produced.

Cadmium, cobalt, gallium, selenium, tantalum (produced from ores other than columbite-tantalite), titanium (produced from ores other than occurring in beach sand minerals): (i) Primary: Four per cent of the ASP of relevant metal chargeable on the relevant metal contained in the ore produced (ii) By-product: Two per cent of the ASP of relevant metal chargeable on the relevant by-product metal contained in the ore produced. Tungsten: Three per cent of the ASP of tungsten trioxide (WO3) on contained WO3 per tonne of ore on a pro-rata basis.

Vanadium, (i) Primary: Four per cent of the ASP of vanadium pentoxide (V2O5) on contained V2O5 per tonne of ore on a pro-rata basis (ii) By-product: Two per cent of the ASP of V2O5 on contained V2O5 per tonne of ore on pro-rata basis.

Critical minerals have become essential for economic development and national security in the country. Critical minerals such as Cadmium, Cobalt, Gallium, Indium, Selenium and Vanadium and have uses in batteries, semiconductors and solar panels. These minerals gained significance given India's commitment towards energy transition and achieving net-zero emission by 2070.

Minerals like Beryllium, Titanium, Tungsten and Tantalum are used 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. The proposal is also expected to increase the generation of employment in the mining sector.

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