New royalty rates for strategic minerals

New royalty rates for strategic minerals

Context: The Union Cabinet approved royalty rates for lithium, niobium, and Rare Earth Elements (REEs). For lithium and niobium a royalty rate of 3%  each has been fixed, while for Rare Earth Elements (REEs), the rate has been set at 1%.

Strategic / Critical Minerals

  • Critical minerals are those minerals that are essential for economic development and national security. The lack of availability of these minerals or concentration of extraction or processing in a few geographical locations may lead to supply chain vulnerabilities and even disruption of supplies.
  • Critical minerals are the foundation on which modern technology is built. From solar panels to semiconductors, and wind turbines to advanced batteries for storage and transportation, the world needs critical minerals to build these products. Simply put, there is no energy transition without critical minerals, which is why their supply chain resilience has become an increasing priority for major economies.

Critical / Strategic Mineral in India and India’s Dependency on Imports

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  • It is a soft, silvery metal. It has the lowest density of all metals. It reacts vigorously with water.
  • The most important use of lithium is in rechargeable batteries for mobile phones, laptops, digital cameras and electric vehicles. Lithium is also used in some non-rechargeable batteries for things like heart pacemakers, toys and clocks.
  • Lithium metal is made into alloys with aluminium and magnesium, improving their strength and making them lighter. A magnesium-lithium alloy is used for armour plating. Aluminium-lithium alloys are used in aircraft, bicycle frames and high-speed trains.
  • Lithium oxide is used in special glasses and glass ceramics. Lithium chloride is one of the most hygroscopic materials known and is used in air conditioning and industrial drying systems (as is lithium bromide). 
  • Lithium stearate is used as an all-purpose and high-temperature lubricant. Lithium carbonate is used in drugs to treat manic depression, although its action on the brain is still not fully understood. Lithium hydride is used as a means of storing hydrogen for use as a fuel.


  • A silvery metal that is very resistant to corrosion due to a layer of oxide on its surface.
  • Niobium is used in alloys including stainless steel. It improves the strength of the alloys, particularly at low temperatures. Alloys containing niobium are used in jet engines and rockets, beams and girders for buildings and oil rigs, and oil and gas pipelines.
  • This element also has superconducting properties. It is used in superconducting magnets for particle accelerators, MRI scanners and NMR equipment.
  • Niobium oxide compounds are added to glass to increase the refractive index, which allows corrective glasses to be made with thinner lenses.

Rare Earth Elements

  • The 17 rare earth elements (REE) include the 15 Lanthanides (atomic number 57 — which is Lanthanum — to 71 in the periodic table) plus Scandium (atomic number 21) and Yttrium (39). REEs are classified as light RE elements (LREE) and heavy RE elements (HREE).
  • Some REEs are available in India — such as Lanthanum, Cerium, Neodymium, Praseodymium and Samarium, etc. Others such as Dysprosium, Terbium, and Europium, which are classified as HREEs, are not available in Indian deposits in extractable quantities. Hence, there is a dependence on countries such as China for HREEs, which is one of the leading producers of REEs, with an estimated 70 per cent share of the global production.
  • The rare earth elements are used in Electric vehicles. They are used in motors and not the batteries. These EVs consist of a permanent magnet motor. The magnets used in these motors are made with REEs such as neodymium, terbium, and dysprosium.

Q. With reference to the management of minor minerals in India, consider the following statements : (UPSC -2019)

1. Sand is a ‘minor mineral’ according to the prevailing law in the country.

2. State Governments have the power to grant mining leases of minor minerals, but the powers regarding the formation of rules related to the grant of minor minerals lie with the Central Government.

3. State Governments have the power to frame rules to prevent illegal mining of minor minerals.

Which of the statements given above is/are correct?

(a) 1 and 3 only

(b) 2 and 3 only

(c) 3 only

(d)1, 2 and 3

Ans. (a)

Practice MCQ 

Q 1. Consider the following statements:

1. Minerals which are essential for economic development and national security are termed Critical / Strategic Minerals.

2. Respective state governments have the power to specify competitive royalty rates for the mining of strategically significant minerals

3. Alloys containing niobium are used in jet engines, beams and girders for buildings

How many of the above statements are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Ans. (b)

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