FCC

Cabinet greenlights royalty rates for 12 vital minerals

2024-03-06

It was announced by the Union Cabinet that royalty rates for 12 critical and strategic minerals had been set by amending the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). The Second Schedule of the MMDR Act underwent changes to incorporate Beryllium, Cadmium, Cobalt, Gallium, Indium, Rhenium, Selenium, Tantalum, Tellurium, Titanium, Tungsten, and Vanadium. The royalty rate for these minerals has been fixed at 2-4%, a decrease from the previous 12% applicable to all unlisted minerals.

According to an official statement, the rationalisation of royalty rates for all 24 critical and strategic minerals has been completed. In March 2022, the centre notified the royalty rates for four critical minerals - Glauconite, Potash, Molybdenum, and Platinum Group of Elements (PGE). The approval for royalty rates for Lithium, Niobium, and Rare Earth Elements (REE) was granted in October 2023.

The rate rationalization aligns with efforts to auction critical and strategic mineral mines in the country. Minister for Coal and Mines, Pralhad Joshi, commented on the development, stating that the rationalisation of royalty would facilitate increased participation of investors in the auction and leasing of mines, leading to a boost in mining and mineral processing.

Joshi emphasized the significant benefits reaped by states through mineral sector reforms, citing remarkable earnings growth. For instance, Odisha witnessed an 860% increase in earnings from 2015-16 to 2022-23. Over the span of eight years, Chhattisgarh's earnings grew by 620%, Jharkhand's by 425%, and Karnataka's by 316%.

The royalty rate on minerals holds considerable financial importance in the bidding process. The Ministry of Mines has also formulated the method for calculating the average sale price (ASP) of these minerals, facilitating the determination of bid parameters.

In addition to the ongoing auction of 20 mines, the centre invited bids for another 18 critical and strategic mineral blocks under a second tranche. Out of these, 17 mineral blocks are available for the grant of a Composite License, while one mineral block is designated for the grant of a Mining Lease.