Cabinet decision: Royalty rates for 12 critical minerals finalised

The Union Cabinet on Thursday specified the royalty rate for 12 critical and strategic minerals, that primarily include beryllium, cadmium, cobalt, gallium, indium, rhenium, selenium, tantalum, tellurium, titanium, tungsten and vanadium.

Royalty rates have been fixed between 2 and 4 per cent depending on the mineral and its by-products.

“This completes the exercise of the rationalisation of royalty rates for all 24 critical and strategic minerals” Anurag Thakur, Union Minister for Information and Broadcasting said.

Previously, the royalty rates of seven critical minerals, viz., glauconite, potash, molybdenum, PGM (platinum group of minerals) lithium, niobium and REE (rare earth elements) was declared by the Centre.

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In 2023, India declared a list of 24 critical and strategic minerals — a first of its kind — leading to necessary amendments in MMDR Act.

The amendment provided that mining lease and composite licence of these 24 minerals shall be auctioned by the Centre.

First tranche of critical mineral auctions took place in November 2023 while the second tranche began from February 29.

“Today’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,” Thakur said.

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Favourable push

Royalty rate on minerals is an important financial consideration for the bidders in auction of blocks.

“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 Minister said.

The Second Schedule of the MMDR Act provides royalty rates for various minerals. 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 minerals were 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,” a senior Mines Ministry official explained.

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Declared Rates

As per the newly decided royalty rates, beryllium, indium, rhenium and tellurium will have a 2 per cent of the ASP of the relevant metal chargeable on the relevant metal contained in the ore produced.

Cadmium, cobalt, gallium, selenium, tantalum (produced from press other than columbite-tantalite) and titanium would have a royalty rate at 4 per cent for the primary product / mineral; and in case the mineral comes as a by -product it would have a royalty at 2 per cent.

Vanadium royalty rates too are in two stages - 4 per cent for the primary mineral and 2 per cent for by-products.

Tungsten will have a royalty rate of3 per cent o r the ASP of Tungsten Trioxide (WO3).

The Geological Survey of India (GSI) and Mineral Exploration & Consultancy Ltd. (MECL) have recently handed over the exploration report of 13 blocks containing one or more of critical minerals like cobalt, titanium, gallium, vanadium and tungsten.

“Further, these agencies are conducting exploration for these critical and strategic minerals in the country,” a Mines Ministry official said.

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