India aims to secure consistent and improved supply of essential minerals including lithium, copper, cobalt and rare earth elements, which are vital for nuclear energy, renewable energy, space, defence, telecommunications and advanced electronics sectors. Currently, the supply chain of these minerals is largely dominated by China.The government is expected to present amendments to mining laws in Parliament this week, with the primary focus on enabling state funding for acquiring critical mineral assets abroad. Having secured all required internal governmental approvals, the amendment Bill to the Mines and Minerals (Development and Regulation) Act could be introduced in Parliament as soon as Monday, according to a senior official’s statement to ET. The administration intends to utilise funds from the National Mineral Exploration Trust (NMET) for these acquisitions. The trust presently holds more than ₹6,000 crore, accumulated from mining lease holders who are required to contribute 2% of their applicable royalty to the trust.
Supply chain for critical minerals in focus
Established in 2015 to accelerate mineral exploration in India, the organisation has approved projects valued at Rs 4,000 crore. “The change in mandate will allow funds to be used for acquiring overseas assets besides supporting domestic exploration,” the official said.The NMET fund receives approximately Rs 1,000 crore annually, according to the official, who noted: “The collection will increase as more mines are operationalised.” The trust’s name will be modified to incorporate ‘development’, reflecting its broader scope encompassing exploration, acquisition and development of critical mineral assets internationally.
Plugging gaps
In January, ET reported that new amendments to the MMDR Act are expected this year, intended to strengthen critical mineral supply chains. The most recent modification to the Act occurred in 2023. “The amendment will address the core issue of critical mineral raw material availability,” the official said.The government is exploring options to permit the sale of mineral stockpiles from captive mines through one-time payments. “There are a number of captive mines where huge dumps of minerals have been accumulated which are not usable due to its low grade or unsuitability for the plants,” according to a government representative.State authorities have reported that over 50% of extracted minerals prove unsuitable for captive end-use facilities. Current regulations prohibit captive mines from selling these accumulated deposits. The proposed regulatory changes would authorise states to allow the sale of stockpiles within leased areas upon payment of supplementary fees.The administration also aims to streamline regulations for incorporating newly identified minerals and adjacent areas to current mining leases for a prescribed fee. Holders of deep-seated mineral resource leases could request permission to include neighbouring areas, limited to a single application and restricted to 10% of the existing leased space.Mineral extraction from these additional areas would incur a 10% surcharge above the auction premium for auctioned mines. For non-auctioned mines, royalty rates on mineral production from expanded areas would be doubled. Official data shows India’s mineral production (excluding atomic, minor and hydrocarbon energy minerals) reached Rs 1.40 lakh crore in fiscal 2023-24, increasing from Rs 1.24 lakh crore in the previous year.