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Updated March 1st, 2024 at 16:51 IST

Cabinet Rolls Out Royalty Rates for 12 Critical Minerals: Checklist & Here's Why It's Important

Royalty rates are important because they determine how much money mining companies have to pay the government for extracting minerals.

Reported by: Digital Desk
Critical minerals are essential for economic development and national security, which the government statement following the approval also reiterates.
Critical minerals are essential for economic development and national security, which the government statement following the approval also reiterates. | Image:Unsplash
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New Delhi: The Union Cabinet, led by Prime Minister Narendra Modi, gave the green light on Thursday to set royalty rates for mining 12 ‘critical and strategic’ minerals, which means India can now mine these rare earth elements, which include beryllium, cadmium, cobalt, gallium, indium, rhenium, selenium, tantalum, tellurium, titanium, tungsten, and vanadium.

This decision means that they have now set fair prices for mining 24 important minerals. Earlier, the government had fixed royalty rates for four critical minerals on March 15, 2022, and three others on October 12, 2023.

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The Mines and Minerals (Development and Regulation) Amendment Act, 2023, which came into effect on August 17, 2023, identified 24 critical and strategic minerals. The amendment as of now mandates that mining leases and composite licences for these minerals be auctioned by the Central Government. Following the approval of royalty rates by the Union Cabinet, the government can now sell areas of land to mine these minerals for the first time in the country.

What is the Purpose of Royalty Rates?

Royalty rates are important because they determine how much money mining companies have to pay the government for extracting minerals. Higher royalty rates mean higher costs for the companies, which can affect their profits and decisions to invest in mining projects.  The Ministry of Mines has also devised a method for calculating the average sale price (ASP) of these minerals to make it easier for the determination of bid parameters.


The Second Schedule of the MMDR Act has made royalty rates for various minerals specific. However, the default royalty rate for minerals not particularly mentioned is set at 12 percent of the ASP, which is considerably high compared to other critical and strategic minerals. To address this, specific royalty rates have been established 

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Royalty Rates for Rare Earth Elements (As per Ministry of Mines):

  • Beryllium, Indium, Rhenium, and Tellurium: 2 percent of the ASP of the relevant metal contained in the ore produced.
  • Cadmium, Cobalt, Gallium, Selenium, Tantalum, and Titanium: 4 percent of the ASP of the relevant metal contained in the ore produced (primary), 2 percent of the ASP of the relevant by-product metal contained in the ore produced (by-product).
  • Tungsten: 3 percent of the ASP of Tungsten Trioxide (WO3) contained WO3 per tonne of ore on a pro rata basis.
  • Vanadium: 4 percent  of the ASP of Vanadium Pentoxide contained V2O5 per tonne of ore on a pro rata basis (primary); 2 percent of the ASP of Vanadium Pentoxide contained V2O5 per tonne of ore on a pro rata basis (by-product).

Why Approval of Royalty on Critical Elements Was Necessary?

Critical minerals are essential for economic development and national security, which the government statement following the approval also reiterates. The rare earth elements find applications in various sectors, such as batteries, semiconductors, and defence equipment. According to the cabinet’s report, the move will  encourage indigenous mining of these rare earth minerals and is expected to reduce imports and promote the establishment of related industries and infrastructure projects, thereby generating employment in the mining sector.

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The Geological Survey of India (GSI) and Mineral Exploration & Consultancy Ltd. (MECL) have submitted exploration reports for 13 blocks containing critical minerals like cobalt, titanium, gallium, vanadium, and tungsten. These agencies are actively conducting exploration activities for critical and strategic minerals across the country.

The Central Government had initiated the auction of critical and strategic mineral blocks in November 2023, which, as per their claims, received a ‘positive response’ from the industry. A total of 20 mineral blocks are being auctioned in the first tranche, with the bid submission deadline set for February 26, 2024.

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Published March 1st, 2024 at 13:40 IST

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