Cabinet approves royalty rates for mining of 12 critical and strategic minerals

Subject: Geography

Section: Economic Geography

Context:

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.

More on news:

These minerals include Beryllium, Cadmium, Cobalt, Gallium, Indium, Rhenium, Selenium, Tantalum, Tellurium, Titanium, Tungsten and Vanadium.
This completes the exercise of the rationalization of royalty rates for all 24 critical and strategic minerals.
It may be noted that the Government had notified the royalty rate of 4 critical minerals, viz., Glauconite, Potash, Molybdenum and Platinum Group of Minerals on 15th March, 2022 and of 3 critical minerals, viz., Lithium, Niobium and Rare Earth Elements on 12th October, 2023.

About The Mines and Minerals (Development and Regulation) Amendment Act, 2023:

The Mines and Minerals (Development and Regulation) Amendment Act, 2023, which came into force from 17th August, 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.
The Second Schedule of the MMDR Act provides royalty rates for various minerals.

Item No. 55 of the Second Schedule:

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% of the Average Sale Price (ASP).
If the royalty rate for these is not specifically provided, then their default royalty rate would be 12% of ASP, which is considerably high as compared to other critical and strategic minerals.
This royalty rate of 12% is not comparable with other mineral producing countries.

About Critical Minerals:

Critical minerals refer to mineral resources, both primary and processed, which are essential inputs in the production process of an economy, and whose supplies are likely to be disrupted due to the risks of non-availability or unaffordable price spikes.
To tackle such supply risks, major global economies periodically evaluate which minerals are critical for their jurisdiction through a quantitative assessment.
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, solar panels, etc.
These minerals have gained significance in view of India’s commitment towards energy transition and achieving net-zero emission by 2070.