New Royalty Rates of Critical Minerals

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News– The Union Cabinet has approved the revision of royalty rates for four critical minerals- caesium, graphite, rubidium, and zirconium—to encourage domestic production.

About Royalty Rate

  • A royalty rate is a fee imposed by the government on mining companies for extracting minerals from the earth. It ensures that the state receives an equitable return for exploiting its natural resources.
  • Legal Framework:
    • Governed by the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Mineral Concession Rules, 1960.
    • Central Government has the authority to fix and revise royalty rates, after consulting state governments.
    • The Second Schedule of the MMDR Act lists royalty rates for each mineral.
  • Collection: Royalty is remitted by leaseholders or mining companies to the state government in accordance with central legislation. The rates are periodically revised to reflect market fluctuations and strategic priorities

Key Features of the decision

  • Graphite:
    • Royalty: Graphite with 80% or higher carbon will have a royalty of 2% of average sale price (ASP), while graphite with less than 80% carbon will attract 4% of ASP.
    • Note: Previously, royalty was charged per tonne, but it will now follow an ad valorem (price-linked) system to reflect market value.
    • Applications: Used as a key component in electric vehicle (EV) batteries, lubricants, and refractories.
  • Caesium:
    • Royalty: 2% of ASP, calculated based on the metal content in the ore.
    • Applications: Critical for high-tech electronics, atomic clocks, GPS systems, and medical instruments.
  • Rubidium:
    • Royalty: 2% of ASP, based on the metal content in the ore.
    • Applications: Used in specialty glasses, fibre optics, telecommunication systems, and night vision devices.
  • Zirconium:
    • Royalty: 1% of ASP, calculated on the metal content in the ore.
    • Applications: Widely used in nuclear energy, aerospace, healthcare, and manufacturing.
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