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Central Government of India has taken a significant step towards bolstering domestic production and reducing import dependency by amending the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act, 1957) through the MMDR Amendment Act, 2023. Effective from August 17, 2023, this amendment empowers the Central Government to exclusively auction mining leases and composite licences for 24 critical minerals, which include Lithium bearing minerals, Niobium bearing minerals, and minerals from the "rare earths" group not containing Uranium and Thorium.
One of the key provisions of this amendment is the specification of royalty rates for certain strategic minerals, namely Lithium, Niobium, and Rare Earth Elements (REEs). The Central Government has amended the Second Schedule of the MMDR Act, 1957, through Notification No. G.S.R. 736(E) dated October 13, 2023, to establish these royalty rates, as detailed in Annexure I.
For Lithium, the royalty rate is set at three percent of the London Metal Exchange price chargeable on the Lithium metal in the ore produced. Niobium royalties are determined differently based on whether the Niobium is primary (produced from ores other than Columbite-tantalite) or a by-product (also produced from ores other than Columbite-tantalite). For primary Niobium, the royalty rate is three percent of the average sale price of Niobium metal contained in the ore produced, while for by-product Niobium, it is also three percent of the average sale price of Niobium metal contained in the ore produced. Rare Earth Elements (produced from ores other than Monazite occurring in beach sand minerals) are subject to a royalty rate of one percent of the average sale price of Rare Earth Oxide (REO) chargeable on the REO contained in the ore produced.
This development marks the first-time auctioning of these critical and strategic minerals in the country, aiming to encourage indigenous mining and reduce import reliance. The strategic importance of these minerals lies in their widespread usage across various industries and their significance in the geopolitical landscape.
Encouraging domestic production of these minerals is expected to not only reduce import dependency but also foster the development of related industries and infrastructure projects. Moreover, it aligns with the government's vision of promoting a self-reliant India ('AtmaNirbhar Bharat') and advancing economic growth.
In furtherance of this initiative, the Central Government initiated the first tranche of e-auction for 20 mineral blocks containing critical and strategic minerals on November 29, 2023. This auction aims to ensure a consistent supply of these minerals domestically, thereby strengthening the country's supply chain resilience.
Union Minister of Coal, Mines, and Parliamentary Affairs, Shri Pralhad Joshi, provided this information in a written reply in Lok Sabha, underscoring the government's commitment to promoting domestic production and fostering a self-reliant economy.
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