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Govt. Sets Royalty Rates For Lithium, Niobium & Rare Earth Metals Mining

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Under PM Narendra Modi’s leadership, the Union Cabinet approved changes to the Mines and Minerals (Development and Regulation) Act, 1957, setting royalty rates for Lithium, Niobium, and Rare Earth Elements.

The recent Mines and Minerals (Development and Regulation) Amendment Act of 2023, enacted by Parliament and effective August 17, 2023, has introduced notable changes. One significant change includes the removal of six minerals, such as Lithium and Niobium, from the atomic minerals category. This alteration allows the private sector to obtain concessions for these minerals through auctions.

Moreover, the Act stipulates that the Central Government will oversee the auctioning of mining leases and composite licenses for 24 pivotal and strategic minerals, detailed in Part D of the Act’s First Schedule. This list encompasses minerals like Lithium, Niobium, and REEs (excluding Uranium and Thorium).

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Following the Union Cabinet’s recent decision to define royalty rates, the Central Government is now poised to auction Lithium, Niobium, and REEs blocks for the first time domestically. The auction’s financial aspects for bidders heavily rely on the royalty rates. The Ministry of Mines has also outlined the method for computing the Average Sale Price (ASP) of these minerals, which will aid in setting auction parameters.

As outlined in the MMDR Act’s Second Schedule, different minerals have various royalty rates. In particular, Item No.55 states that minerals without a predefined royalty rate will carry a default rate of 12% of ASP. This rate is significantly high compared to other crucial minerals and doesn’t align with rates in other mineral-rich countries. Hence, the royalty rates for Lithium, Niobium, and REE have been set as:

  1. Lithium: 3% of the London Metal Exchange price.
  2. Niobium: 3% of the Average Sale Price (covering both primary and secondary sources).
  3. REE: 1% of the Average Sale Price of Rare Earth Oxide.

Critical minerals, including Lithium and REEs, are now fundamental to India’s economic growth and national defence, especially in light of the country’s dedication to energy transitions and the goal of achieving net-zero emissions by 2070. Given their applications and current geopolitical context, these minerals have also evolved as strategic elements. Boosting domestic mining will likely decrease imports, stimulate related industry growth, and initiate infrastructure projects, potentially leading to more job opportunities within the mining sector.

Recent reports on REE and Lithium block explorations have been presented by the Geological Survey of India (GSI). The GSI and other exploration entities are also actively investigating other critical minerals in India. The Central Government is gearing up to introduce the initial phase of auctions for these pivotal minerals, which includes elements like Lithium, REE, Nickel, and others, in the near future.

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Aryaman Raghuvanshi
Aryaman Raghuvanshi
Aryaman Raghuvanshi is a Journalist at EFY. His passion is to explore the future of mobility, which gets him to cover latest technologies shaping the future of automobiles and EVs. But, at times he writes on broader technologies too. LinkedIn: https://www.linkedin.com/in/aryaman-raghuvanshi-2431b7153

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