The Union Cabinet approved amendment of Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) for specifying rate of royalty in respect of 3 critical and strategic minerals, namely, Lithium, Niobium and Rare Earth Elements (REEs).
Rate of royalty
- The rate of royalty will enable the Central Government to auction blocks for Lithium, Niobium and REEs for the first time in the country.
- Royalty rate on minerals is an important financial consideration for the bidders in auction of blocks.
- Further, manner for calculation of Average Sale Price (ASP) of these minerals has also been prepared by the Ministry of Mines which will enable determination of bid parameters.
- The Second Schedule of the MMDR Act provides royalty rates for various minerals.
- Item No.55 of the Second Schedule provides that royalty rate for the minerals whose royalty rate is not specifically provided therein shall be 12% of the Average Sale Price (ASP).
- The Union Cabinet has specified royalty rates for Lithium (3% of London Metal Exchange price), Niobium (3% of Average Sale Price) and REE- (1% of Average Sale Price of Rare Earth Oxide).
Critical minerals opened for private mining
- Recently, the Mines and Minerals (Development and Regulation) Amendment act, 22023 was passed by the Parliament, which has come into force from 17th August, 2023.
- The Amendment delisted six minerals, including Lithium and Niobium, from the list of atomic minerals.
- The amendment allows grant of concessions for these minerals to private sector through auction.
- The amendment provided that mining lease and composite license of 24 critical and strategic minerals (which are listed in Part D of the First Schedule of the Act), including Lithium, Niobium and REEs (not containing Uranium and Thorium), shall be auctioned by the Central Government.
