New Delhi: The Union Cabinet today 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, viz., Beryllium, Cadmium, Cobalt, Gallium, Indium, Rhenium, Selenium, Tantalum, Tellurium, Titanium, Tungsten and Vanadium.
This completes the exercise of the rationalisation 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 – Glauconite, Potash, Molybdenum and Platinum Group of Minerals – on March 15, 2022 and of 3 critical minerals – Lithium, Niobium and Rare Earth Elements – on October 12, 2023.
Recently, the Mines and Minerals (Development and Regulation) Amendment Act, 2023, which came into force on August 17, 2023, had listed 24 critical and strategic minerals in Part D of the First Schedule of the MMDR Act. The amendment provided that the mining lease and composite licence of these 24 minerals shall be auctioned by the Central Government.
Today’s approval of the Union Cabinet for the specification of the rate of royalty will enable the Central Government to auction blocks for these 12 minerals for the first time in the country.
The royalty rate on minerals is an important financial consideration for the bidders in the auction of blocks. Further, the manner for calculation of the 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. Item No. 55 of the Second Schedule provides that the royalty rate for the minerals whose royalty rate is not specifically provided therein shall be 12% 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% of ASP, which is considerably high as compared to other critical and strategic minerals. Also, this royalty rate of 12% is not comparable with other mineral-producing countries.
Thus, it is decided to specify a reasonable royalty rate as below:
| Beryllium, Indium, Rhenium, Tellurium: | 2% 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
(ii) By-product |
4% of the ASP of relevant metal chargeable on the relevant metal contained in the ore produced.
2% cent. of the ASP of relevant metal chargeable on the relevant by-product metal contained in the ore produced. |
| Tungsten: | 3% of the ASP of Tungsten Trioxide (WO3) on contained WO3 per tonne of ore on a pro rata basis. |
| Vanadium:
(i) Primary
(ii) By-product |
4% of the ASP of Vanadium Pentoxide on contained V2O5 per tonne of ore on a pro rata basis.
2% of the ASP of Vanadium Pentoxide on contained V2O5 per tonne of ore on a pro rata basis. |
Critical minerals such as Cadmium, Cobalt, Gallium, Indium, Selenium and Vanadium have usage in batteries, semiconductors, solar panels, etc. These minerals have gained significance given India’s commitment towards energy transition and achieving net-zero emission by 2070. Minerals like Beryllium, Titanium, Tungsten, and Tantalum, are used in new technologies, electronics and defence equipment. Encouraging indigenous mining would lead to a reduction in imports and the setting up of related industries and infrastructure projects. The proposal is also expected to increase the generation of employment in the mining sector.
The Geological Survey of India (GSI) and the Mineral Exploration and Consultancy Ltd. (MECL) recently handed over the exploration report of 13 blocks containing one or more critical minerals like Cobalt, Titanium, Gallium, Vanadium and Tungsten. Further, these agencies are conducting exploration for these critical and strategic minerals in the country.
The Central Government launched the first tranche of the auction of critical and strategic mineral blocks in November 2023 for minerals such as Lithium, REE, Nickel, Platinum Group of Elements, Potash, Glauconite, Phosphorite, Graphite, Molybdenum, which it claimed was getting positive response from the industry. A total of 20 mineral blocks are being auctioned in the first tranche. The last date for submission of bids (Bid Due Date) for the first tranche of the auction was February 26, 2024.
– global bihari bureau
