The Mines Ministry plans to propose a new set of royalty rates across 12 recently identified critical minerals that include ones like beryllium, cadmium, tungsten, and cobalt, among others.

The rationalised royalty rates are pegged between two and four per cent, depending on the mineral and its by-product extracted, sources said.

A draft note is currently being prepared and is to be shared across other ministries, such as New and Renewable Energy, Steel, Heavy Industries, Science and Technology, and Power, among others. It will also be shared across departments like DPIIT, Department of Economic Affairs, Department of Atomic Energy, etc.

The 12 critical minerals, whose royalty rates will be rationalised in the first such exercise, include beryllium, indium, rhenium, tellurium, cadmium, cobalt, gallium, selenium, tantalum, titanium, tungsten and vanadium.

According to an official, there are no financial implications of this proposal in terms of seeking approval for incurring recurring or non-recurring expenditures.

“Rationalisation of the rate of royalty will enable the Central Government to auction blocks containing these minerals for the first time in the country,” the official aware of these discussions said.

These minerals are critical and strategic due to their usage and geopolitical scenario, and they find usage across the high-tech economy and energy transition of the country. They are also a part of India’s move towards reducing its carbon footprint.

“Encouraging indigenous mining would lead to a reduction in imports and the setting up of related industries. It will also help in overcoming supply chain vulnerabilities and dependency in other countries.” a draft note reviewed by businessline read.

Additional payment over the royalty is quoted by the bidders as a premium payable to the State governments, based on which a successful bidder is selected. So having a reasonable rate of royalty would not adversely affect the revenue earning of the State but would help in attracting more players in the auction of blocks, it is being argued.

Proposed rates

The rate for beryllium, which is used in aerospace and defence applications, is proposed at 2 per cent, slightly lower than the severance rate of the US (the largest producer), which is at 2.6 per cent.

Indium, rhenium and tellurium royalty rates are also proposed at 2 per cent of the average sale price of the relevant metal rechargeable on the relevant metal contained in ore.

For cadmium (a by-product of zinc refining), cobalt, gallium, selenium, tantalum and titanium, the rate of the primary ore is 4 per cent while the by-product is priced at a 2 per cent royalty rate.

The tungsten royalty rate is proposed at 3 per cent of the average sale price of tungsten dioxide; the vanadium royalty rate for the primary offering is 4 per cent of the average sale price of vanadium pentoxide and 2 per cent for the by-product.

The proposed royalty rate in respect of cadmium and vanadium is lower as compared to the existing royalty rate. However, no production of vanadium is reported in the country.

Similarly, in the case of cadmium, small production was reported in 2016–17 and 2017–18 (35 tonnes and 47 tonnes, respectively), but no production was reported for 2018–19, 2019–20, and 2020–21.

“Thus, reduction in rate of royalty for cadmium and vanadium will not have a major financial impact,” said an official.