Centre introduces new royalty rates ahead of first offshore mineral auction

Ahead of the first offshore mineral auctions, the central government has introduced royalty rates for construction sand, polymetallic nodules, and overburden or waste—key minerals to be extracted through offshore mining. The royalty rate for dolomite has also been slated for revision. This comes as the Centre prepares to bring 20 blocks for auction in the coming months.  The royalty rates, defined under the Offshore Areas Mineral (Development and Regulation) Act, 2002, were initially limited to a few core minerals, including brown ilmenite (leucoxene), ilmenite, rutile, zircon, dolomite, garnet, gold, limestone, lime mud, manganese ore, monazite, sillimanite, and silver. With a new list of minerals available for offshore mining, the government is updating royalty rates to meet rising market demand and account for the commercial value of these resources.  Under the proposal, construction sand will carry a royalty of ₹40 per tonne, while polymetallic nodules and crusts will be taxed at three per cent of the average sale price on an ad valorem basis. Overburden or waste material, often containing trace minerals, will have a royalty of ₹10 per tonne. Additionally, the government is proposing to increase the royalty for dolomite and limestone and lime mud from the current ₹40 per tonne to ₹50 per tonne.  The Act has established ad valorem royalty rates for key minerals, meaning that rates are based on the mineral’s sale value rather than quantity. In addition to polymetallic nodules, resources such as brown ilmenite (leucoxene), ilmenite, rutile, and zircon have a royalty set at two per cent of the average sale price on an ad valorem basis. Garnet and manganese ore each have a royalty of three per cent of the average sale price, while sillimanite is subject to a royalty of two and a half per cent of the sale price. A standard royalty of ten per cent of the sale price on an ad valorem basis applies to all other unspecified minerals. 

  The royalty for dolomite, limestone, and lime mud has been raised from forty to fifty rupees per tonne. Gold carries a royalty of one and a half per cent of the London Bullion Market Association price, while monazite is charged at one hundred and twenty-five rupees per tonne. Sillimanite has a royalty rate of two and a half per cent of the sale price, and silver is assessed at five per cent of the London Metal Exchange price.  Offshore mineral resources span a wide variety, each with distinct applications in industries ranging from construction to high-tech manufacturing.  Construction sand, essential for infrastructure projects, is typically found in seabed deposits. Dolomite, used in steelmaking and as a building material, can be found in marine sediments. Limestone and lime mud are vital for cement production and are commonly extracted from carbonate-rich offshore deposits. Polymetallic nodules and crusts are rich in metals like manganese, nickel, and cobalt, making them valuable for batteries and electronics.  Minerals like brown ilmenite (leucoxene), ilmenite, rutile, and zircon are key for producing titanium and zirconium, used in aerospace, medical devices, and ceramics. Garnet, often extracted from sand deposits, is utilised as an abrasive. Gold and silver, commonly found in alluvial and placer deposits, serve in jewellery, electronics, and currency reserves. Manganese ore supports steel and battery manufacturing, while monazite is a source of rare earth elements essential for electronics and renewable energy technologies. Sillimanite finds use in refractories and ceramics due to its heat-resistant properties.  Overburden or waste comprises materials removed during mining processes but may contain trace minerals of interest.