Cabinet Approves Royalty Rates For Lithium, Niobium REE’s

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approved amendment of Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) . The...

Ruby Thakur
October 12, 2023
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The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approved amendment of Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) . The Union Cabinet has approved royalty rates for three critical and strategic minerals — lithium, niobium and rare earth elements (REEs)

Cabinet Approves Royalty Rates For Lithium, Niobium REE’s

Why In News

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approved amendment of Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) .
The Union Cabinet has approved royalty rates for three critical and strategic minerals — lithium, niobium and rare earth elements (REEs)

MMDR Act 2023

Recently, the Mines and Minerals (Development and Regulation) Amendment act, 2023 was passed by the Parliament, which has come into force from 17th August, 2023.
The Amendment, among other things, delisted six minerals, including Lithium and Niobium, from the list of atomic minerals, thereby allowing grant of concessions for these minerals to private sector through auction.
Further, the amendment provided that mining lease and composite license of 24 critical and strategic minerals (which are listed in Part D of the First Schedule of the Act), including Lithium, Niobium and REEs (not containing Uranium and Thorium), shall be auctioned by the Central Government.

What Is Rare Earth Elements

The rare earth elements (REE) are a set of seventeen metallic elements. These include the fifteen lanthanides on the periodic table plus scandium and yttrium.
The 17 rare earth elements are: lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb), lutetium (Lu), scandium (Sc), and yttrium (Y).
Rare earth elements are an essential part of many high-tech devices.

Royalty Rates

A royalty is a legally binding payment made to an individual or company for the ongoing use of their assets, including copyrighted works, franchises, and natural resources.
An example of royalties would be payments received by musicians when their original songs are played on the radio or television, used in movies, performed at concerts, bars, and restaurants, or consumed via streaming services.
A royalty rate is a payment made by one party, the licensee (the user of intangibles), to another party, the licensor (the owner of intangibles), for the use of intangibles owned by the licensor.

New Amendment

Approval of the Union Cabinet of specification of rate of royalty will enable the Central Government to auction blocks for Lithium, Niobium and REEs for the first time in the country.
Royalty rate on minerals is an important financial consideration for the bidders in auction of blocks.
Further, 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.
it is decided to specify a reasonable royalty rate of Lithium, Niobium and REE as below:
Lithium – 3% of London Metal Exchange price
Niobium –3% of Average Sale Price (both for primary and secondary sources)
REE– 1% of Average Sale Price of Rare Earth Oxide
Although the standard practice for minerals lacking a specified rate traditionally pegs the royalty at 12 per cent of the ASP under the Mines and Minerals (Development and Regulation) Act,

Importance Of Critical Minerals

Critical minerals have become essential for economic development and national security in the country.
Critical minerals such as Lithium and REEs have gained significance in view of India’s commitment towards energy transition and achieving net-zero emission by 2070.

Encouraging indigenous mining would lead to reduction in imports and setting up of related industries and infrastructure projects.
The proposal is also expected to increase generation of employment in the mining sector.
Critical minerals and materials are vital for a wide range of industries, including aerospace, health care, and defense.
Critical materials are the resources needed to produce key technologies for the energy transition, including wind turbines, solar panels, batteries for EVs and electrolysers.

Geological Survey Of India

Geological Survey of India (GSI) carries out mapping and exploration activities for various mineral commodities including Rare Earth Element (REE) and Rare Metal (RM) in different parts of the country.

Aim to find out potential mineralized locales as well as to augment mineral resource.
India’s first lithium reserves were discovered in Jammu and Kashmir, the Geological Survey of India (GSI) has found another reserve of the crucial mineral in Degana in Rajasthan’s Nagaur district.

It is believed that these reserves are much bigger in quantity than the one found in the Union Territory and can meet 80% of the total country’s demand.

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Ruby Thakur

General Studies Lecturer SSBCrackExams, BSc In PCM, Trained Students For State Services Exams. Expertise in Geography ,Polity & Current Affairs. Love Travelling.