India Takes Steps to Enhance Critical Minerals Production as Cabinet Approves Royalty Rate Adjustments
In a significant policy shift, the Union Cabinet, led by Prime Minister Narendra Modi, has approved the rationalization of royalty rates for critical minerals including graphite, caesium, rubidium, and zirconium. This decision aims to enhance domestic production of these essential minerals, which are vital for green energy technologies. The move comes in response to increasing export restrictions imposed by China, the current global leader in critical mineral production. By facilitating the auction of mineral blocks, the government hopes to reduce import dependency and strengthen local supply chains.
The newly approved policy changes the royalty calculation method from a per-tonne basis to an ad valorem basis. This means that royalties will now be based on the average sale price (ASP) of the minerals. For graphite with 80% or more carbon content, the royalty will be set at 2% of the ASP, while other grades will incur a 4% royalty. Zirconium will have a royalty rate of 1%, and both rubidium and caesium will be taxed at 2% of the ASP. This adjustment is expected to better reflect price variations across different grades of minerals, ensuring a fairer system for both the government and mining companies.
The government anticipates that this change will not only boost domestic production but also create job opportunities and reduce reliance on imports. Currently, India imports about 60% of its graphite needs, despite having operational graphite mines and additional blocks available for auction. The new royalty structure is designed to encourage investment in the mining sector, thereby enhancing the overall production capacity of these critical minerals.
Importance of Critical Minerals
Graphite, caesium, rubidium, and zirconium are classified as critical minerals due to their essential roles in advanced technological applications and energy transformation. Graphite is particularly important as it serves as an anode material in electric vehicle (EV) batteries, providing superior conductivity and charge storage capabilities. Zirconium is valued for its resistance to corrosion and stability at high temperatures, making it suitable for use in nuclear energy, aerospace, and healthcare sectors.
Caesium is primarily utilized in advanced electronics, including atomic clocks and GPS systems, while rubidium is used in specialized glass for fiber optics and telecommunications. The government’s focus on these minerals aligns with global trends toward sustainable energy solutions and technological advancements, further emphasizing the need for increased domestic production.
Future Auctions and Exploration
On September 16, 2025, the government announced the Sixth Tranche auction of critical mineral blocks, which includes five graphite blocks, two rubidium blocks, and single blocks of caesium and zirconium. The recent approval of the new royalty rates is expected to facilitate a more competitive bidding process, allowing bidders to submit reasonable financial offers during the auction.
The Geological Survey of India (GSI) and the Mineral Exploration Corporation Limited (MECL) have also prepared additional graphite blocks for future auctions. Currently, 26 blocks remain under exploration, indicating a robust pipeline for potential mineral development. This proactive approach by the government aims to ensure that India can meet its growing demand for critical minerals while simultaneously fostering economic growth and job creation in the mining sector.
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