Cabinet Approves New Royalty Rates for 4 Critical Minerals
Kartavya Desk Staff
Source: ET
Subject: Economy
Context: The Union Cabinet has approved the rationalisation of royalty rates for four critical minerals — Graphite, Caesium, Rubidium, and Zirconium — to promote domestic production.
About Cabinet Approves New Royalty Rates for 4 Critical Minerals:
What is Royalty Rate?
• It is a charge levied by the government on mineral producers for the extraction of natural resources, calculated as a percentage of the Average Sale Price (ASP) of the mineral or on a fixed per-tonne basis.
Law Governing:
• Governed by the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Mineral Concession Rules, 1960, which empower the Central Government to fix or revise royalty rates.
Aim: To ensure fair value capture for the state, encourage exploration and auction of mineral blocks, and promote the availability of critical minerals vital for green technologies and strategic sectors like EVs, nuclear energy, and electronics.
Key Features of the Decision:
• Graphite: Royalty will now depend on quality — 2% for higher-grade (≥80% carbon) and 4% for lower-grade (<80%) graphite. Earlier, it was a flat per-tonne charge; now it changes with market price.
• Caesium & Rubidium: Both will have a 2% royalty on the value of metal extracted.
• Zirconium: Will attract a 1% royalty on its metal value.
• The new rates will make it easier to auction blocks containing these minerals and discover linked elements like lithium and rare earths.
• It brings India’s royalty structure in line with international norms (2–4%), ensuring fair pricing and more investor interest.
Significance:
• Reduces Import Dependence: India currently imports 60% of its graphite requirement; new rates incentivize indigenous mining and processing.
• Boosts Green Energy Transition: Critical for EV batteries, nuclear cladding, atomic clocks, and fiber optics—key components in India’s clean-tech ecosystem.
• Supports ‘Atmanirbhar Bharat’: Ensures resource security, employment generation, and supply chain resilience.