India Launches First Tranche Auction of Critical and Strategic Minerals

November 29, 2023

The Ministry of Mines is set to mark a significant milestone by launching the inaugural tranche auction of critical and strategic minerals. Union Minister of Coal, Mines, and Parliamentary Affairs, Shri Pralhad Joshi, will inaugurate this historic event on November 29, 2023. The auction includes twenty blocks of critical and strategic minerals strategically located across the country, aiming to bolster the economy, fortify national security, and support the nation’s transition towards a cleaner energy future.

Essential for Economic Development and National Security

Critical minerals play a pivotal role in India’s economic development and national security. Recognizing their importance, this auction aims to address supply chain vulnerabilities by ensuring the availability and extraction of these minerals spread across the country. The global shift towards a technology-driven economy heavily relies on minerals like lithium, graphite, cobalt, titanium, and rare earth elements (REE).

Meeting the Demands of a Green Energy Future

India’s commitment to achieving 50% of cumulative electric power installed capacity from non-fossil sources by 2030 is a driving force behind the surge in demand for critical minerals. These minerals, crucial for sectors like renewable energy, defense, agriculture, pharmaceuticals, high-tech electronics, telecommunications, transport, and gigafactories, are currently met through imports.

Amendment to MMDR Act and Royalty Rates

A significant step in this direction occurred on August 17, 2023, with the amendment of the Mines and Minerals (Development and Regulation) Act. The amendment identified 24 minerals as critical and strategic, granting the Central Government the authority to prioritize their auction. The revenue generated from these auctions will benefit the respective State Governments. Royalty rates for critical minerals have also been rationalized to encourage broader participation.

Transparent Online Auction Process

The auction process, commencing on November 29, 2023, will be conducted online through a transparent two-stage ascending forward auction process. To ensure widespread access to information, details of mineral blocks, auction terms, timelines, and other relevant information can be accessed on the MSTC auction platform from 6 pm on November 29, 2023.

Encouraging Participation and Rationalized Royalty Rates

To incentivize participation, royalty rates for critical minerals have been specified. For example, Platinum Group of Metals (PGM) has a royalty rate of 4%, Molybdenum at 7.5%, and Glauconite and Potash at 2.5%, as specified in March 2022. The rates for Lithium, Niobium, and Rare Earth Elements were outlined on October 12, 2023, with royalty rates set at 3%, 3%, and 1%, respectively.

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