India plans first tranche of critical mineral auction on Nov 29

First trance of critical minerals to be auctioned on Nov. 29

The mines ministry will launch the first tranche auction of critical and strategic minerals such as lithium and graphite on November 29, as India looks to strengthen the domestic supply of raw materials required to support its shift to green energy. Pralhad Joshi, Union minister for coal, mines and parliamentary affairs,  will kick off the process, the ministry said in a statement on November 28.

The development comes as the mines ministry is in the process of preparing a policy for critical mineral which will include a road map for strengthening the supply chain of critical minerals. Earlier this month, the government said it will auction 20 blocks of critical minerals, adding that indigenous technology needed for mining and processing these minerals will be explored as well.

The auction shall be held online through a transparent two-stage ascending forward auction process, the ministry said, adding that the eligible bidder shall be selected based on the highest percentage of the value of mineral dispatched quoted by them.

The revenue generated from these auctions will accrue to state governments. The 20 blocks of minerals to be auctioned are spread across the country, the ministry said.

Transition to low-carbon future

The move comes against the backdrop of India's goal to achieve 50 percent of cumulative electric power installed capacity from non-fossil sources by 2030.  The plan is set to drive the demand for electric cars, wind and solar energy projects and battery storage systems thereby increasing the demand for these critical minerals.

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Manufacturing batteries requires high use of critical minerals such as nickel, lithium, cobalt and other rare earth elements. India now relies entirely on imports for these raw materials. According to the ministry data from 2020, the country imports these minerals from countries such as Japan, China, Russia, Belgium, and the US.

Tweaks to the mining legislation

In September, the government amended the Mines and Minerals (Development and Regulation) Amendment Bill, allowing private players to explore and mine these critical minerals which earlier was limited to only government entities.

Last month, the Centre had approved royalty rates of three per cent each for lithium and niobium and 1 percent for rare earth elements (REEs).  The  government has specified royalty rates for lithium at 3 percent, niobium at 3 percent and rare earth elements at 1 percent.