India Sets New Royalty Rates for Key Minerals

The Union Cabinet of India has taken a significant step by approving new royalty rates for four essential minerals: graphite, caesium, rubidium, and zirconium. These minerals are not only critical for various high-tech applications but also play a vital role in India’s green energy initiatives. This decision comes at a crucial time when India aims to reduce its dependency on imports, particularly from China, which currently dominates the global market for these minerals.

The new royalty rates are designed to reflect the market prices more accurately. For instance, the royalty rate for graphite has shifted from a per-tonne basis to an ad valorem basis. This change means that the royalty will now be calculated as a percentage of the average sale price, allowing for better alignment with price fluctuations. Specifically, graphite with 80% or more fixed carbon will incur a royalty of 2% of the average sale price, while lower-grade graphite will attract a 4% royalty.

Similarly, the royalty rates for caesium and rubidium have been set at 2% of the average sale price of the respective metals in the ore. For zirconium, the royalty is pegged at a lower rate of 1%. These adjustments will encourage domestic production and promote the auctioning of mineral blocks, which is expected to unlock further potential in critical minerals.

These four minerals are crucial for the energy transition and various high-tech applications. Graphite, for example, is a key component in electric vehicle (EV) batteries, which are becoming increasingly important as India pushes for cleaner energy solutions. Zirconium, on the other hand, is essential in nuclear energy applications due to its corrosion resistance. Caeseium finds its place in high-tech electronics, particularly atomic clocks and GPS systems, while rubidium is utilized in specialty glasses for fiber optics and telecommunications.

The Cabinet's decision is expected to enhance the auctioning of mineral blocks, thereby unlocking not only the targeted minerals but also associated critical minerals like lithium, tungsten, rare earth elements (REEs), and niobium. This move will significantly contribute to India's ambitions of becoming self-sufficient in mineral resources and reducing vulnerability in the supply chain.

In summary, the new royalty rates represent a strategic shift towards fostering local production and technological advancement while simultaneously addressing global supply chain challenges. The focus on critical minerals aligns with India's broader goal of sustainable development and energy independence.