The Union Cabinet recently approved amendments to the Mines and Minerals (Development and Regulation) Act, 1957 for specifying royalty rates of mining for critical and strategic minerals.
Changes in Royalty Rates of Minerals:
- The rate of royalty with respect of 12 critical and strategic minerals was amended as an addition to the earlier amendments in the MMDR Act.
- It includes Beryllium, Cadmium, Cobalt, Gallium, Indium, Rhenium, Selenium, Tantalum, Tellurium, Titanium, Tungsten and Vanadium.
- The Mines and Minerals (Development and Regulation) Amendment Act, 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.
- This 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 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 bid parameters.
- The Second Schedule of the MMDR Act provides royalty rates for various minerals.
- Item No. 55 of the Second Schedule provides that royalty rate for the minerals whose royalty rate is not specifically provided therein shall be 12% of the Average Sale Price (ASP).
- If the royalty rate for these is not specifically provided, then their default royalty rate would be 12% of ASP, high as compared to other critical and strategic minerals.
- This royalty rate of 12% is not comparable with other mineral-producing countries.
About Critical and Strategic Minerals:
- Critical and strategic minerals are essential for modern technology and industry.
- They are used in many products, including electric vehicles, smartphones, and wind turbines.
- Minerals are important for many high-tech appliances that power the global economy, like electric vehicles, smartphones, and wind turbines.
- But even though these labels are often used interchangeably, not every country defines critical or strategic minerals the same way.
- Critical minerals are in high demand and are often imported.
- They are used in sectors such as Renewable energy, Defense, Agriculture, Pharmaceuticals, High-tech electronics, Telecommunications, and Transport.
Examples of critical and strategic minerals:
- Energy technologies: Indium, gallium, germanium, selenium, tellurium, neodymium, lanthanum, tantalum, vanadium, lithium, silicon, platinum, cobalt, nickel, arsenic, and silver
- Aerospace, communications, and defense: Vanadium, rhenium, cobalt, nickel, niobium, neodymium, samarium, and cobalt
- Strategic minerals are important for Defense, Energy, Nuclear, Space, Communications, and Advanced economy, like Uranium, Tin, Cobalt, Lithium, Germanium, Gallium, Tungsten.
- The supply of strategic minerals is limited and subject to disruption, so lack of availability could lead to supply chain vulnerabilities and even disruption of supplies.
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