In News:

The Union Cabinet has approved revised royalty rates for four critical minerals-Graphite, Caesium, Rubidium, and Zirconiumto promote domestic mining, reduce imports, and strengthen India’s position in the global clean-tech and strategic minerals sector.

What are Royalty Rates?

• A government levy charged on mineral producers for extracting natural resources.
• Calculated either as:
  • A percentage of the Average Sale Price (ASP), or
  • A fixed per-tonne rate.
• Legal Basis:
  • Governed under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).
  • Empowered through the Mineral Concession Rules, 1960 to fix and revise rates.

Aim of Rationalisation

• Ensure fair value capture for the state.
• Encourage exploration and auction of new mineral blocks.
• Support availability of critical minerals essential for:
  • Electric vehicles (EVs)
  • Renewable and nuclear energy systems
  • Electronics and defence applications
• Align India’s royalty structure with global benchmarks (typically 2–4%).

New Royalty Structure for Critical Minerals

• Graphite
  • ≥80% fixed carbon:2% royalty on ASP (ad valorem)
  • <80% fixed carbon:4% royalty on ASP
  • Earlier: Flat per-tonne rate; now linked to quality and market price.
• Caesium: 2%of ASP based on the metal contained in ore.
• Rubidium: 2%of ASP on the metal value.
• Zirconium: 1%royalty on the metal value.

Additional Feature: Revised rates will improveauction viabilityof mineral blocks and facilitate discovery of associated strategic minerals such as lithium and rare earth elements.

Significance of the Cabinet Decision

• Reduces Import Dependency
  • India imports nearly 60% of its graphite needs.
  • Revised rates incentivise domestic exploration, mining, and value addition.
• Boosts Clean-Energy Transition
  • These minerals are crucial for:
  • EV battery anodes (graphite)
  • Nuclear reactor components (zirconium)
  • Atomic clocks and energy storage (caesium, rubidium)
  • High-tech electronics and fiber optics
• Enhances ‘Atmanirbhar Bharat’
  • Strengthens resource security and supply chain stability.
  • Opens opportunities for investment and job creation in the mining sector.
• Encourages Global Competitiveness
  • Royalty rates aligned with international norms improve investor confidence.
  • Facilitates geological exploration to identify deeper reserves and critical co-located minerals.