Cabinet approves royalty rates for mining of three critical and strategic minerals- Lithium, Niobium and Rare Earth Elements (REEs)

Source: The post is based on the article “Cabinet approves royalty rates for mining of three critical and strategic minerals- Lithium, Niobium and Rare Earth Elements (REEs)” published in “PIB” on 12th October 2023

What is the News?

The Union Cabinet has approved a royalty rate for lithium, niobium, and for Rare Earth Elements (REEs). 

Background:

Recently, the Mines and Minerals (Development and Regulation) Amendment act, 2023 was passed by the Parliament.

The amendment delisted six minerals  including Lithium and Niobium, from the list of atomic minerals, thereby allowing grant of concessions for these minerals to the private sector through auction. 

Further, the amendment provided that mining lease and composite license of 24 critical and strategic minerals including Lithium, Niobium and REEs (not containing Uranium and Thorium) shall be auctioned by the Central Government.

Why have new royalty rates been approved for lithium, niobium and Rare Earth Elements (REEs)?

The Second Schedule of the MMDR Act provides royalty rates for various minerals. 

The act currently specifies a royalty rate of 12% of the average sale price (ASP) for minerals that are not specifically listed in that Schedule.This rate is much higher than global benchmarks.

Hence, that’s why new royalty rates have been specified by amending the Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957.

These amendments effectively aligns India’s royalty rates with global benchmarks and paves the way for commercial exploitation of these minerals through auctions, which can be conducted by the Centre or states.

What are Lithium, Niobium and Rare Earth Elements(REEs)?

Lithium: It is an alkali metal.It is one of the key components in rechargeable batteries that find usage in mobiles, laptops, electric vehicles, and medical devices like pacemakers.It is also used in energy storage solutions.

Rare earth elements: It refers to a group of 17-odd minerals that cover ones like scandium, yttrium, and cerium, among others.Most of these are used as catalysts and magnets, with the most common usage being in alloys, glass, electronics, petroleum extraction, electric motors of hybrid and EVS and wind turbines, among others.

Niobium: It is a silvery metal with a layer of oxide on its surface which makes it resistant to corrosion. 

– It is used in alloys, including stainless steel, to improve their strength, particularly at low temperatures.

– Alloys containing niobium are used in jet engines, beams and girders for buildings, and oil and gas pipelines.Given its superconducting properties, it is also used in magnets for particle accelerators and MRI scanners.

– The main source of Niobium is the mineral columbite, which is found in countries such as Canada, Brazil, Australia, and Nigeria.