Cabinet approves royalty rates for 12 critical minerals

New Delhi, Feb 29 (IANS) 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 4 critical minerals: glauconite, potash, molybdenum, and platinum group of minerals on March 15, 2022 and of 3 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 chips used in smartphones and electrical vehicles are made with these minerals in which a handful of countries such as China have a monopoly.

The Mines and Minerals (Development and Regulation) Amendment Act, 2023, which has come into force from 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 mining lease and composite licence of these 24 minerals will be auctioned by the Central government.

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

The Second Schedule of the MMDR Act provides royalty rates for various minerals. Its item no 55 provides that 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, 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: 4 per cent of the ASP of relevant metal chargeable on the relevant metal contained in the ore produced (ii) By-product: 2 per cent of the ASP of relevant metal chargeable on the relevant by-product metal contained in the ore produced.

Tungsten: 3 per cent of the ASP of tungsten trioxide (WO3) on contained WO3 per tonne of ore on pro rata basis.

Vanadium, (i) Primary: 4 per cent of the ASP of vanadium pentoxide (V2O5) on contained V2O5 per tonne of ore on pro rata basis (ii) By-product: 2 per cent of the ASP of V2O5 on contained V2O5 per tonne of ore on pro rata basis.