India's El Dorado All eyes set on first lithium, rare earth elements auctions
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2023-07-19
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The Indian government on Wednesday approved the selling price as well as the royalty on lithium and rare earth elements (REEs), thereby enabling the first auction of their recently-discovered blocks, and kept royalty at “reasonable” rates to encourage private sector participation in their commercial mining.For lithium, the Indian Cabinet approved a royalty rate of three percent based on the London Metal Exchange price chargeable on the “contained lithium metal”, since the newly-discovered resources would require proper technology and quantum investment to profitably extract lithium from its ore.The royalty on REE has been fixed at one percent of the average sale price of rare earth oxide (REO) chargeable on the REO contained in the produced ore. This is in line with the international practice where REE royalty is half of the royalty on ilmenite, rutile and zircon (two percent).Both lithium and REE were not exclusively specified in the Second Schedule of the Mines and Minerals (Development and Regulation) Act of 1957. This meant that they attracted royalty rates of 12 per cent. The new rates would be applicable for the next three years. Wednesday’s fixation of average sale price and royalty would enable state governments to auction the newly-found blocks. The Mines Ministry had proposed that royalty may “initially be kept at a reasonable level” to encourage more participation. It said that in prescribing royalty for minerals to be mined for the first time in the country, factors such as ease in royalty administration, fair revenue to the states and investor interest to mine the minerals must be considered. “Encouraging indigenous mining of lithium and REE is in the national interest. It would lead to a reduction in imports and would also help in the efforts of making Atmanirbhar Bharat,” it argued.India meets about 70 percent of its lithium - the key element for manufacturing electric vehicle batteries - through imports even as it seeks to increase the EV penetration from current 1 percent to 30 percent by 2030.India depends on China and Hong Kong for about 70 percent of its lithium imports and more than 90 percent for lithium-ion. Australia is the world’s top lithium producer followed by the ‘Lithium Triangle’ of Argentina, Chile and Bolivia.Recently, 5.9 million tonnes of lithium deposits were discovered in Salal-Hamina areas of Reasi district of Jammu & Kashmir by the Geological Survey of India (GSI). As for REE, Karnataka had informed that the Mincheri REE block in Raichur district was explored by the Geological Survey of India up to G3 level. Since the atomic minerals reported in this block were below the notified threshold value, the state government had been authorised to auction the block.GSI has also conducted exploration and finalised the geological reports for nine other blocks with three in Bihar, two each in Gujarat and Maharashtra, one each in Jharkhand and Uttar Pradesh.
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