Strategically Significant or Critical Minerals

What’s in today’s article?

• Why in News?
• What are Critical Minerals?
• Identification of 30 Critical Minerals by the Indian Govt
• Lower Royalty Rates for Strategic Minerals
• Significance of Lower Royalty Rates for Strategic Minerals

Why in News?

• The Centre has approved an amendment to a key law in order to specify competitive royalty rates for the mining of three strategically significant minerals - lithium, niobium, and rare earth elements (REEs).
• The decision comes after the government removed 6 minerals from the list of ‘specified’ atomic minerals, which could set the stage for participation of the private sector through the auctioning concessions for these minerals.

What are Critical Minerals?

• A mineral is critical when the risk of supply shortage and associated impact on the economy is (relatively) higher than other raw materials.
• These minerals are essential for economic development and national security, and their lack of availability/ the concentration of extraction/ processing in a few geographical locations could potentially lead to supply chain vulnerabilities.
• These (such as lithium, graphite, cobalt, titanium, and rare earth elements) are essential for the advancement of many sectors, including hightech electronics, telecommunications, transport, and defence.
• It forms part of multiple strategic value chains, including -
  • Clean technologies initiatives such as zero-emission vehicles, wind turbines, solar panels;
  • Information and communication technologies, including semiconductors; and
  • Advanced manufacturing inputs and materials such as defence applications, permanent magnets, ceramics.

Identification of 30 Critical Minerals by the Indian Govt

• The identification of these minerals was done on the basis of a report on critical minerals prepared by an expert team constituted by the Ministry of Mines.
  • The ministry will revisit the list periodically.
• The panel decided to have a 3-stage assessment to arrive at a list of critical minerals.
  • In the first stage, the panel looked at the strategies of various countries such as Australia, USA, Canada, UK, Japan and South Korea, and identified a total of 69 elements/ minerals.
  • In the second stage, an inter-ministerial consultation was carried out with different ministries to identify minerals critical to their sectors.
  • The third stage assessment was to derive an empirical formula for evaluating minerals criticality, taking cognizance of the EU methodology that considers two major factors - economic importance and supply risk.
• Based on this process, a total of 30 minerals were found to be most critical for India, out of which two are critical as fertiliser minerals.

Lower Royalty Rates for Strategic Minerals

• The specification of new royalty rates by amending the Second Schedule of the Mines and Minerals (Development and Regulation) Act 1957, effectively aligns India’s royalty rates with global benchmarks.
  • The MMDR Act 1957 currently specifies a royalty rate of 12% of the average sale price (ASP) for minerals that are not specifically listed in that Schedule.
• After the Cabinet’s decision, lithium mining will attract a royalty of 3% based on the London Metal Exchange price.
• Niobium too, will be subject to 3% royalty calculated on the ASP, in case of both primary and secondary sources.
  • Niobium is a silvery metal with a layer of oxide on its surface, which makes it resistant to corrosion.
  • It is used in alloys, including stainless steel, to improve their strength, particularly at low temperatures.
  • Alloys containing niobium are used in jet engines, beams and girders for buildings, and oil and gas pipelines.
  • Given its superconducting properties, it is also used in magnets for particle accelerators and MRI scanners.
  • The main source of this element is the mineral columbite, which is found in countries such as Canada, Brazil, Australia, and Nigeria.
• REEs will have a royalty of 1% based on the ASP of the Rare Earth Oxide (the ore in which the REE is most commonly found).
• The Ministry of Mines has laid down the way to calculate the ASP of these minerals, on the basis of which the bid parameters will be determined.

Significance of Lower Royalty Rates for Strategic Minerals

• It will pave the way for commercial exploitation of these minerals through auctions, which can be conducted by the Centre or states.
• Domestic mining is sought to be encouraged with the aim of lowering imports, and setting up related end-use industries such as electric vehicles (EVs) and energy storage solutions.
• The Cabinet decision is also expected to increase employment in the mining sector.
• These critical minerals are also seen as an important prerequisite for India to meet its commitment to energy transition, and to achieve net-zero emissions by 2070.

Q.1) What is the Mines and Minerals (Development and Regulation) Act?

The MMRD Act (1957) forms the basic framework of mining regulation in India. It is applicable to all minerals except minor minerals and atomic minerals.

Q.2) What was the ‘Khanan Prahari’ app launched?

The government has launched a mobile app namely ‘Khanan Prahari’ for reporting unauthorised coal mining activities so that monitoring and taking suitable action on it can be done by concerned Law and Order enforcing authority.

Source: Cabinet approves royalty rates for lithium, two other strategic minerals | IE