Cabinet Approves Royalty Rates For Mining Of Rare Metals

On October 11, the Cabinet approved royalty rates for the mining of rare minerals which included lithium, niobium and rare earth elements (REEs). According to a press release, the government will impose 'reasonable' royalty rates, i.e. lithium at 3% of the London Metal Exchange price, niobium at 3% of the average sale price, both for primary and secondary sources and for REE at 1% of the average sale price of rare earth oxide.

The royalty rates were proposed since unless specifically provided these minerals would have been subject to a higher 12% rate of the average sale price.

Further, the statement said, 'Lithium, Niobium and REEs have also emerged as strategic elements due to their usages and geo-political scenario. Encouraging indigenous mining would lead to a reduction in imports and the setting up of related industries and infrastructure projects. The proposal is also expected to increase the generation of employment in the mining sector.'

The Mines and Minerals (Development and Regulation) Amendment Act, 2023 was only very recently passed by the Parliament and came into force on August 17. The amendment delisted six minerals, including lithium and niobium from the list of atomic minerals, thereby allowing the grant of concessions for these minerals to the private sector through auction. As per the statement, the Centre is likely to launch the first tranche of the auction of critical and strategic minerals shortly.

The royalty approval lent support to the metals and mining company shares in the last two trading sessions.