In a move set to invigorate the mining sector and bolster the supply of critical minerals, the Union Cabinet, led by Prime Minister Narendra Modi, has approved the rationalization of royalty rates for four key minerals: caesium, graphite, rubidium, and zirconium. The decision, announced Wednesday, aims to incentivize domestic production, reduce import dependency, and stimulate investment in the green energy and high-tech sectors.
The revised royalty rates reflect a significant reduction compared to previous levels. For caesium and rubidium, the new rate is set at 2% of the Average Sale Price (ASP) of the respective metal contained in the ore produced. Zirconium will attract a royalty of 1% of ASP. Graphite, previously subject to a royalty rate specified on a per-tonne basis, will now be charged on an ad valorem basis. Graphite with 80% or more fixed carbon will have a 2% royalty of ASP, while graphite with less than 80% fixed carbon will be subject to a 4% royalty of ASP. The shift to an ad valorem system for graphite is intended to better reflect variations in market prices across different grades.
The government expects the new royalty structure to encourage the auction of mineral blocks containing caesium, rubidium, and zirconium. By unlocking these minerals, the initiative will also facilitate the extraction of associated critical minerals such as lithium, tungsten, rare earth elements, and niobium. These minerals are essential for various high-tech applications, including electric vehicles, renewable energy systems, and aerospace technologies.
Graphite, in particular, is a crucial component in electric vehicle (EV) batteries, serving as the anode material that enables high conductivity and charge capacity. Currently, India imports 60% of its graphite needs. By boosting domestic graphite production, the cabinet's decision aims to reduce import dependence and strengthen the EV supply chain.
Zirconium is another mineral of strategic importance, used in industries such as nuclear energy, aerospace, and healthcare due to its corrosion resistance and high-temperature stability. Caesium finds applications in atomic clocks, GPS systems, and medical equipment, including cancer therapy. Rubidium is used in specialty glasses for fiber optics, telecommunication systems, and night vision devices.
The decision aligns with the government's broader strategy to enhance the availability of critical minerals and secure the supply chain for key industries. The central government issued a notice on September 16, 2025, for the Sixth Tranche of auctions for critical mineral blocks, which includes five blocks of graphite, two of rubidium, and one each of caesium and zirconium.
The Mines and Minerals (Development and Regulation) Act, 1957, lists graphite and zirconium among the 24 critical and strategic minerals. The new royalty rates are in line with the prevailing rates for most critical minerals, which typically range from 2% to 4%. It is expected that these revisions will stimulate domestic mining activity, attract investment, and create employment opportunities.
