How new royalty rates for strategic minerals can help cut their imports

How new royalty rates for strategic minerals can help cut their imports

Subject :Economy

Section: External sector

Context: Recently, the government sanctioned royalty rates for three pivotal and strategic minerals i.e lithium, niobium, and rare earth elements (REEs)

More about the news:

• The Indian government has amended a key law to set competitive royalty rates for mining lithium, niobium, and rare earth elements (REEs).
• Private sector participation in mining concessions for these minerals is now possible, following the removal of these minerals from the ‘specified’ atomic minerals list.
• These changes aim to facilitate mining leases for minerals used in electric vehicle batteries and other technologies.
• Notably, a significant lithium deposit was found in Jammu & Kashmir, enhancing India’s resource base for rechargeable batteries.
• The royalty rates on these minerals are —
  • Lithium at 3% of the London Metal Exchange price,
  • Niobium at 3% of the average sale price, both for primary and secondary sources, and
  • For REE the rate will be 1% of the average sale price of rare earth oxide.

What are Critical Minerals:

• Critical minerals are elements that are the building blocks of essential modern-day technologies, and are at risk of supply chain disruptions.
• These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines.
• Based on their individual needs and strategic considerations, different countries create their own lists.
• However, such lists mostly include graphite, lithium, cobalt, rare earths and silicon which is a key mineral for making computer chips, solar panels and batteries.

What is Rare earth Elements:

• Rare Earth Elements (REEs) consist of 17 chemical elements, including the 15 lanthanides and two additional elements, scandium (Atomic Number 21) and yttrium (Atomic Number 39).
• The Lanthanide series encompasses the 15 metallic chemical elements with atomic numbers ranging from 57 to 71, starting from lanthanum and ending with lutetium.
• Scandium and yttrium are categorized as rare-earth elements because they are commonly found in the same ore deposits as lanthanides, sharing similar chemical properties while having distinct electronic and magnetic characteristics.
• Cerium (Atomic Number 58) is the most prevalent rare earth metal among the lanthanides.
• Rare earth elements typically display a range of colors, from shiny silver to iron gray. They are soft, malleable, ductile, and tend to be reactive, particularly at elevated temperatures or when in a finely divided form.
• REEs have a wide array of applications, from civilian uses such as smartphones, laptops, and petroleum refining catalysts, to military applications, including nuclear technologies. They are also crucial in the production of electric vehicles, wind turbines, and drones.
• China possesses the largest reserves of REEs, accounting for 37 percent of the world’s total. Brazil and Vietnam follow with 18 percent each, while Russia holds 15 percent. Other nations collectively account for the remaining 12 percent.
• There is no shortage of rare earths. But their extraction is difficult.

How identification of 30 Critical Minerals is done by the Indian Govt:

• The identification of these minerals was done on the basis of a report on critical minerals prepared by an expert team constituted by the Ministry of Mines.
• The ministry will revisit the list periodically.
• The panel decided to have a 3-stage assessment to arrive at a list of critical minerals.
  • In the first stage, the panel looked at the strategies of various countries such as Australia, USA, Canada, UK, Japan and South Korea, and identified a total of 69 elements/ minerals.
  • In the second stage, an inter-ministerial consultation was carried out with different ministries to identify minerals critical to their sectors.
  • The third stage assessment was to derive an empirical formula for evaluating minerals criticality, taking cognizance of the EU methodology that considers two major factors – economic importance and supply risk.
• Based on this process, a total of 30 minerals were found to be most critical for India, out of which two are critical as fertilizer minerals:

What are the 30 critical minerals:

• Based on this process, a total of 30 minerals were found are Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.