Cabinet Approves Royalty Rate Rationalisation for Critical Minerals

The Union Cabinet has approved the rationalisation of royalty rates for four critical minerals essential for green energy applications and high-tech industries.

The revised rates establish caesium at 2% of average sale price on metal content, graphite at 2-4% on ad valorem basis depending on carbon content, rubidium at 2% on metal content, and zirconium at 1% on metal content.

The decision aims to facilitate the auction of mineral blocks containing these elements while simultaneously unlocking associated critical minerals such as lithium, tungsten, rare earth elements and niobium. The government expects the move to reduce India's import dependence, strengthen supply chain security and generate employment opportunities.

Graphite, a crucial component in electric vehicle batteries serving as anode material, currently sees India importing 60% of its requirements. The country currently operates nine graphite mines, with 27 blocks successfully auctioned and an additional 20 blocks prepared for auction by the Geological Survey of India and Mineral Exploration Corporation Limited.

The royalty rate for graphite has been shifted from a per-tonne basis to an ad valorem structure to reflect price variations across different grades. It remains the only mineral among the 24 critical and strategic minerals listed in the Mines and Minerals (Development and Regulation) Act, 1957, that previously had tonnage-based royalty.

Zirconium finds applications in nuclear energy, aerospace, healthcare and manufacturing due to its corrosion resistance and temperature stability. Caesium is utilised in atomic clocks, GPS systems, precision instruments and medical equipment including cancer therapy devices. Rubidium is essential for specialty glasses in fiber optics, telecommunications and night vision systems.

The government issued a notice inviting tenders on September 16, 2025, for the sixth tranche of critical mineral block auctions, including five graphite blocks, two rubidium blocks, and one block each of caesium and zirconium. The approved royalty rates will enable bidders to submit informed financial proposals during the auction process.

Both graphite and zirconium feature among the 24 critical and strategic minerals identified under the MMDR Act. The royalty rates for most critical minerals have been established in the 2-4% range in recent years, aligning with global practices for strategic resource management.