ROYALTY
RATE FOR CRITICAL MINERALS - ECONOMY
News:
Cabinet approves royalty
rates for lithium, niobium, Rare Earth Elements
What's
in the news?
●
The Union Cabinet approved amendments to
the Mines and Minerals (Development and Regulation) Act, 1957, specifying
royalty rates for three critical and strategic minerals: Lithium, Niobium and Rare
Earth Elements (REEs).
Royalty
Rates:
●
Royalty rates are fees paid to the government for the extraction of minerals or resources
from a specified area.
●
The Second
Schedule of Mines and Minerals (Development and Regulation) Act, 1957 deals
with the royalty rates of minerals.
●
These minerals were delisted from atomic
minerals and can now be auctioned to the private sector.
●
The approved royalty rates are as follows.
○
Lithium
(3% of London Metal Exchange price)
○
Niobium
(3% of Average Sale Price)
○
REEs
(1% of the Average Sale Price of Rare Earth Oxide)
○
If not specified, the royalty rate for
minerals is 12% of the Average Sale Price (ASP).
Significance
of fixing Royalty Rates:
●
Encouraging
indigenous mining of these minerals is crucial for reducing
imports, boosting mining sector investment, promoting economic development and
supporting India’s energy transition and national security. The move is also
expected to create job opportunities in the mining sector.
Issues
in Royalty Rates:
●
Presently,
India’s mineral royalty rates are among the highest in the world,
thus impacting the competitiveness of the sector and putting an economic burden
on mining companies.
Initiatives for Critical Minerals exploration:
|
Initiative |
Details |
|
Amendment to MMRDA |
Amendment to MMRDA in 2023 delisted six minerals, including Lithium and Niobium, from the
list of atomic minerals, thereby allowing private sector participation |
|
Provided for the auction
of mining leases and composite licenses of 24 critical and strategic minerals
by the central government |
|
|
Khanij Bidesh India
Ltd |
It is a government joint venture that aims to secure critical
minerals globally, with a focus on Australia
and South America. |
|
Mineral |
Description |
Common Uses |
|
Lithium |
An alkali metal used in rechargeable batteries for mobiles,
laptops, electric vehicles, and medical devices like pacemakers. |
Rechargeable batteries, energy storage. |
|
Rare Earth Elements |
A group of 17-odd
minerals including scandium, yttrium, cerium, and more. |
Catalysts, magnets, alloys, glass, electronics, petroleum
extraction, electric motors, wind turbines. |
|
Niobium |
A silvery metal with a corrosion-resistant
oxide layer on its surface. The main source of Niobium is the mineral columbite, which is found in
countries such as Canada, Brazil,
Australia, and Nigeria. |
Alloys (stainless steel), jet engines, construction materials,
superconducting magnets (particle accelerators, MRI scanners). |