India approves ad valorem royalties for graphite and other minerals to boost mining

The Union Cabinet on Wednesday approved the rationalisation of royalty rates for four critical minerals—graphite, caesium, rubidium and zirconium—shifting graphite from a fixed per-tonne levy to an ad valorem structure. Under the new rules, graphite with less than 80% fixed carbon content would be charged 4% of the average sale price, while graphite with 80% or more carbon would attract 2%. Caesium and rubidium would carry a 2% royalty on the average sale price based on the specific metal contained in the ore, and zirconium would have a 1% royalty. The government described the change as a move to reduce import dependency and strengthen the minerals supply chain, including better visibility for bidders in ongoing auctions.

Officials noted that the rationalisation is aimed at encouraging the auction of mineral blocks, including graphite, caesium, rubidium and zirconium, and could also help trace other associated minerals such as lithium, tungsten, rare earths and niobium found within ore bodies.

Presently, India imports about 60% of its graphite requirements, a critical ingredient in electric vehicle batteries as the anode material. The new framework is expected to make mining and block auctions more attractive, potentially unlocking significant resources and boosting domestic production.

Block auctions that began this September, with multiple graphite, rubidium, caesium and zirconium blocks in the sixth tranche, illustrate ongoing momentum and may be accelerated by clearer revenue expectations under the ad valorem regime.

Industry observers say the change could boost energy and supply security, though some warn about transition challenges for small miners and the need for clarity on price calculations for mixed ores and composite materials.

Cover image source: Union Cabinet clears new royalty rates of critical minerals 🔗

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