NEW DELHI: The Indian government is set to launch the first round of auctions for critical and strategic minerals such as lithium, graphite, cobalt, titanium, and rare earth elements in the country starting tomorrow. In this initial phase, about 20 blocks containing these crucial minerals will be put up for auction.
“This is a landmark initiative that will boost our economy, enhance national security and support our transition to a clean energy future,” reads the mining ministry in a press note.
These minerals are in high demand, and the usual supply is met through imports.
According to the government, these critical minerals play a crucial role in various sectors, including renewable energy, defense, agriculture, pharmaceuticals, high-tech electronics, telecommunications, transportation, and the establishment of gigafactories, among others.
“The lack of availability of these minerals or concentration of their extraction or processing in a few countries may lead to supply chain vulnerabilities. The future global economy will be underpinned by technologies that depend on minerals such as lithium, graphite, cobalt, titanium and rare earth elements (REE),” said the ministry.
India has pledged to reach a milestone of 50% cumulative electric power installed capacity from non-fossil sources by 2030. This ambitious energy transition plan is expected to boost the demand for electric cars, wind and solar energy projects, and battery storage systems, consequently leading to an increased demand for critical minerals.
Through an amendment in the MMDR Act on August 17, 2023, the government identified 24 minerals as Critical and Strategic minerals. This amendment grants the central government the authority to provide mineral concessions for these minerals, allowing them to prioritize their auction based on the country's requirements. The revenue generated from these auctions will be directed to state governments.
To encourage increased participation in auctions, royalty rates for critical minerals have been rationalized. In March 2022, the government specified royalty rates for Platinum Group of Metals (PGM) at 4%, Molybdenum at 7.5%, and Glauconite and Potash at 2.5%. Subsequently, on October 12, 2023, the government set royalty rates for Lithium at 3%, Niobium at 3%, and Rare Earth Elements at 1%.
The sale of tender documents is scheduled to commence on November 29, 2023. Eligible bidders will be selected based on the highest percentage of the value of mineral despatched as quoted by them.