Cabinet approves royalty rates for lithium, 2 other strategic minerals

The Centre on Wednesday said it has approved royalty rates of 3 per cent each for lithium and niobium and 1 per cent for Rare Earth Elements (REEs).

The decision on the royalty rates for the three critical and strategic minerals was taken by the Union Cabinet chaired by Prime Minister Narendra Modi, according to an official statement.

The approval by the Cabinet will enable the Centre to auction lithium, niobium and REE blocks for the first time in the country, it said.

The royalty rate on minerals is an important financial consideration for bidders during auction of mines. Further, the method for calculating Average Sale Price (ASP) of these minerals has also been prepared by the Centre which will allow determining of bid parameters.

Critical minerals have become important for the nation’s economic development and national security. Lithium and REEs have gained significance keeping in mind the country’s commitment towards energy transition and achieving net-zero emission by 2070.

“The Second Schedule of the MMDR Act provides royalty rates for various minerals...if the royalty rate for lithium, niobium and REE is not specifically provided, then their default royalty rate would be 12 per cent of ASP, which is

considerably high as compared to other critical and strategic minerals. Also, this royalty

rate of 12 per cent is not comparable with other mineral producing countries.”