India considers lithium mining royalty at 3% of LME price- govt sources

LX International

14/06/2023 11:58

By Sarita Chaganti Singh and Neha Arora
       NEW DELHI, June 14 (Reuters) - India's federal
government plans to fix the rate of royalty that mining
companies must pay for extracting lithium at 3% of the prices
prevailing at the London Metal Exchange (LME), two government
sources said.
    India, which has been exploring ways to secure supplies of
lithium - a critical raw material used to make electric vehicle
batteries - in February found its first lithium deposits in the
federally administered region of Jammu and Kashmir.
    The government is expected to auction the newly found
lithium blocks, with estimated reserves of 5.9 million tonnes,
later this year.
    At least a dozen Indian and foreign companies such as Adani
Enterprises  ADEL.NS , Vedanta Ltd  VDAN.NS , Reliance
Industries  RELI.NS , Jindal Steel and Power Ltd  JNSP.NS ,
Himadri Chemicals and Korea's LX International  001120.KS  are
likely to take part in the auction, said the sources, asking not
to be named as the information is not public.
    India's cabinet is expected to consider the proposal of
fixing the rate of royalty for lithium mining at 3% of the rates
prevailing at LME, they said.
    The Ministry of Mines did not immediately respond to a
request for comment.
    The rate of royalty - to be paid to the local administration
of Jammu and Kashmir - would be a major step towards the
country's first auction of its lithium blocks, the sources said.
    India's federal mines ministry fixes royalty rates, but the
revenue goes to state governments or federally administrated
territories.
    India has previously used the LME benchmark to fix the
royalty rate for bauxite mining, the sources said.
    "We studied the royalty rates in other lithium mining
countries," said one of the sources. "The royalty rates in
Australia is also 3% of LME and (it) is 4.5% of LME in
Argentina, Bolivia and Chile - called the lithium triangle."
    India's plans to auction its lithium reserve - estimated as
the seventh largest deposit - comes amid a push by major
economies to secure lithium supplies.
    The United States, Canada and other countries have
established a new partnership aimed at securing the supply of
critical minerals, including lithium.

 (Reporting by Sarita Chaganti Singh, Neha Arora; editing by
David Evans)
 ((Sarita.ChagantiSingh@thomsonreuters.com;))