Rare earth crisis may see India push through new minerals bill in the monsoon session

.

With China curbing exports of rare earth minerals (critical for making components for electric vehicles) and automakers warning of production cuts due to the crisis, the government is hoping to push through the Mines and Minerals Development and Regulation (MMDR) Amendment Bill, 2025, in the monsoon session.

The bill is aimed at fast tracking exploration and mining of critical minerals, for which the union cabinet has approved a National Critical Minerals Mission (NCMM) this January. The NCMM is aimed at ensuring a resilient and self-reliant supply chain for critical minerals essential for green technologies, defence, and high-tech industries.

The mission comes with a total outlay of Rs 34,300 crore -- of which Rs 16,300 crore will be by way of budgetary support, and around Rs 18,000 crore is expected from PSUs and the private sector.

Lower premiums for critical minerals?

The bill, in the works for at least a year, will significantly open up mining of critical minerals, especially for those who already have leases for mining non-critical minerals.

The MMDR will aim to address multiple issues flagged by stakeholders about mining critical minerals. For example, currently there is no provision for the inclusion of associated critical minerals in a non-auctioned mining lease. Associated critical minerals are strategic minerals like cobalt, germanium, and cadmium, that are found in small quantities along with other minerals like lead, zinc, and copper. Rare earth minerals are a subset of critical minerals.

A non-auctioned mining lease refers to a mining lease granted without going through the auction process typically required for certain types of mineral resources.

Also read: Rs 1,345-crore incentive scheme to make rare earth magnets in India soon, says HD Kumaraswamy.

Mining of associated critical minerals, crucial for the development of clean energy, electronics, and defense sectors, is allowed in auctioned mines. But the premiums for the same are pretty high, and they vary depending on the critical mineral.

"Because the premiums and royalties are currently high for associated critical minerals, firms are either not reporting the presence of critical minerals or not utilising them optimally because extraction is capital intensive and affects their margins," said an official privy to the development.

“The bill will look at rationalising the premiums and royalties for mining associated critical minerals to make it attractive for companies. The aim is to scale extraction and processing and do it fast,” the official added.

Widening the scope of the National Mineral Exploration Trust

The bill may also propose to change the name of the National Mineral Exploration Trust (NMET) to National Mineral Exploration and Development Trust to reflect its wider role in the critical mineral mission.

The NMET, which is under the Ministry of Mines, finances various mineral exploration projects.

The bill will enable the trust to fund development of mines, apart from exploration, and also to fund exploration, acquisition, and development of critical mineral assets outside India. These funds can also be used in offshore areas with vast untapped resources.

Established in 2015 under the MMDR Act, the NMET has collected at least Rs 6,000 crore and projects worth more than Rs 4,000 crore have been sanctioned until now.

Often, miners find deep-seated minerals beyond their leased area in contiguous land. But there is no provision currently to allow the mining of such minerals beyond the leased area. Deep-seated minerals are those which occur at a depth of more than 300 metres from the surface and mostly require underground mining.

“The bill may also allow a one-time extension of the existing leases for an additional premium," the official said.