Cabinet approves amendment to MMDR Act for royalty on 12 critical and strategic minerals

The Union Cabinet on Thursday approved the amendment in the MMDR Act to specify the royalty rate on 12 critical and strategic minerals, an official statement said. A decision in this regard was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi, the Ministry of Mines said in a statement.

"The Union Cabinet... Approved the amendment of Second Schedule to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) for specifying rate of royalty in respect of 12 critical and strategic minerals," the statement said.

The 12 critical and strategic minerals are beryllium, cadmium, cobalt, gallium, indium, rhenium, selenium, tantalum, tellurium, titanium, tungsten, and vanadium, it said. This completes the exercise of the rationalisation of royalty rates for all 24 critical and strategic minerals, the Ministry said.

The government notified the royalty rate of four critical minerals, namely glauconite, potash, molybdenum and platinum group of minerals on March 15, 2022 and of 3 critical minerals lithium, niobium and rare earth elements on October 12, 2023.

As per the statement, the Mines and Minerals (Development and Regulation) Amendment Act, 2023, which has come into force from August 17, 2023, had listed 24 critical and strategic minerals in Part D of the First Schedule of the MMDR Act.

The amendment provided that mining lease and composite licence of these 24 minerals shall be auctioned by the central government. The approval for specification of rate of royalty will enable the Centre to auction blocks for these 12 minerals for the first time in the country. Royalty rate on minerals is an important financial consideration for the bidders in auction of blocks, the statement said.

Further, manner for calculation of Average Sale Price (ASP) of these minerals has also been prepared by the Ministry of Mines, which will enable determination of bid parameters, it said.

The Second Schedule of the MMDR Act provides royalty rates for various minerals. Item No. 55 of the Second Schedule provides that royalty rate for the minerals whose royalty rate is not specifically provided therein shall be 12 per cent of the Average Sale Price (ASP).

"Thus, if the royalty rate for these 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," the Ministry statement said. It also said 12 per cent royalty is not comparable with other mineral producing countries.