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RATIONALISATION OF ROYALTY RATES FOR CRITICAL MINERALS

13 Nov 2025 GS 3 Economy
RATIONALISATION OF ROYALTY RATES FOR CRITICAL MINERALS Click to view full image

Context

  • To reduce import dependence, strengthen supply chain security, and promote domestic exploration, the Union Cabinet approved rationalised royalty rates for four critical minerals:

    1. Graphite

    2. Caesium

    3. Rubidium

    4. Zirconium

  • Aim: encourage auctioning of mineral blocks, attract private investment, and support India’s Critical Mineral Strategy.

Why was rationalisation needed?

  • Earlier royalty rates were non-competitive, discouraging bidders.

  • For some minerals, royalty rates were unclear or too high, making mining financially unattractive.

  • India seeks to secure supply chains for battery minerals, electronics, nuclear applications, energy transition technologies.

New Royalty Structure

A. Graphite (major change)

  • Earlier: royalty on per-tonne basis (fixed amount per unit weight).

  • Now: ad valorem basis (percentage of sale price).

  • New rates:

    • Graphite (<80% fixed carbon): 4% of average sale price

    • Graphite (≥80% carbon): 2% of average sale price

Higher-grade graphite gets lower royalty to promote high-quality extraction.

B. Caesium

  • Royalty = 2% of average sale price

  • Basis: metal content extracted

C. Rubidium

  • Royalty = 2% of average sale price

  • Basis: metal contained in ore

D. Zirconium

  • Royalty = 1% of average sale price

  • Favourable rate to encourage auctions in nuclear and refractory material sector.

Benefits Expected

  1. Promote Auctions

    • Rational royalty makes bidding more rational and competitive.

    • Encourages auction of blocks for caesium, rubidium, zirconium which earlier saw limited interest.

  2. Reduce Import Dependence

    • India currently imports large quantities of graphite, zirconium, and traces of caesium, rubidium.

  3. Boost Strategic Industries

    • Graphite → batteries, electric vehicles, refractories.

    • Caesium → atomic clocks, drilling fluids, optical instruments.

    • Rubidium → electronics, biomedical research.

    • Zirconium → nuclear reactors, ceramics, space tech.

  4. Support Critical Minerals Mission

    • Aligned with India's Critical Minerals for Energy Transition strategy.

Prelims Practice MCQs

Q. Caesium, rubidium, and zirconium royalty rates are based on:
A. The total weight of ore extracted
B. The specific metal content within the ore
C. The grade of ore decided by State governments
D. A per-hectare production levy

Answer: B
Royalty is charged on metal content, not total ore weight.

Q. Zirconium is most crucial for which sector in India?
A. Fertilizer production
B. Nuclear energy
C. Cement manufacturing
D. Textile bleaching

Answer: B
Zirconium is essential in nuclear reactors, corrosion-resistant cladding materials, and high-temperature ceramics.



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