Cabinet Greenlights Critical Minerals Boost: How New Royalty Rates Fuel Energy Transition

The Cabinet decision will boost the indigenous production of high-tech minerals, reduce import dependence, and strengthen energy and supply chain security. It will also encourage new investment in the sector.

Briefing reporters on the decisions of the Union Cabinet, Information and Broadcasting Minister Ashwini Vaishnaw said that the decision will promote the auction of mineral blocks containing Caesium, Rubidium and Zirconium, not only unlocking these minerals but also associated critical minerals found with them, such as Lithium, Tungsten, REES and Niobium.

For Caesium, the royalty rate will be two per cent of the Average Sale Price (ASP) of the Caesium metal chargeable on the Caesium metal contained in the ore produced.

In case of Graphite with eighty per cent or more fixed carbon, the royalty rate will be two per cent of ASP on an ad valorem basis, and for Graphite with less than eighty per cent fixed carbon, it will be four per cent of ASP on an ad valorem basis.

In case of Rubidium, the royalty rate will be two per cent of ASP of Rubidium metal chargeable on the Rubidium metal contained in the ore produced, and for Zirconium, it will be one per cent of ASP of Zirconium metal chargeable on the Zirconium metal contained in the ore produced.

Graphite, Zirconium, Rubidium and Caesium blocks are to be auctioned, and there will be relevant amendments in the Second Schedule of the Mines and Minerals Development Act.

An official release said that fixing the royalty rates of Graphite on ad valorem basis will proportionately reflect the change in prices of the mineral across grades. The increase in indigenous production of these minerals would lead to a reduction in imports and supply chain vulnerabilities and also generate employment opportunities in the country.

Graphite, Caesium, Rubidium and Zirconium are important minerals for high-tech applications and energy transition. Graphite and Zirconium are also among the 24 critical and strategic minerals listed in the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).

Graphite is a crucial component in electric vehicle (EV) batteries, primarily serving as the anode material, which enables high conductivity and charge capacity.

However, India imports 60 per cent of its requirement of Graphite. At present, nine Graphite mines are working in the country and a further 27 blocks have been successfully auctioned. Further, GSI and MECL have handed over 20 Graphite blocks, which will be auctioned and around 26 blocks are under exploration.

Zirconium is a versatile metal used in various industries, including nuclear energy, aerospace, healthcare and manufacturing, due to exceptional corrosion resistance and high temperature stability.

Caesium is mainly used in the high-tech electronic sector, particularly in atomic clocks, GPS systems, other high precision instruments, medical instruments, including in cancer therapy. Rubidium is used in the manufacture of speciality glasses used in fibre optics, telecommunication systems, and night vision devices. The Central Government issued NIT on September 16, 2025, for the Sixth Tranche of auction for critical mineral blocks. This also contains five blocks of Graphite, two blocks of Rubidium and one block each of Caesium and Zirconium.

The approval of the Union Cabinet on the rate of royalty will help the bidders to rationally submit their financial bids in the auction. Royalty rate of Graphite has been specified on a rupee per tonne basis since September 1, 2014. It is the only mineral in the list of critical and strategic minerals whose royalty rate was specified on per per-tonne basis.

Further, considering the variations in the Graphite prices across grades, royalty of Graphite is now decided to be charged on an ad valorem basis, so that royalty accruals in different grades would proportionately reflect the changes in the prices of the mineral.

In recent years, royalty rates of most of the critical minerals have been specified at a range of two per cent to four per cent.

- ANI