Govt to amend rules to auction lithium, rare earth minerals

The government has initiated a plan to auction newly discovered lithium and other rare earth minerals later this year, with the mines ministry proposing an amendment to mineral concession rules 2016 to determine the methodology for fixing the value of the estimated resources.

The methodology for the calculation of average sale price (ASP) and value of estimated resources (VER) of rare earth elements (REE) and lithium is important for auctioning the new mines as it forms the basis of determining the bid parameters and auction premium, two people aware of the development said, requesting anonymity.“The mines ministry has put draft amendment rules (to determine the methodology for ASP and VER for stakeholder consultation. The amendment would be finalized by July so that states and Union territories auctioning REE and Lithium mines adopt it to determine the reserve price and bid premium,” said one of the two people cited above.

The government is moving quickly to complete the regulatory exercise for the mining of new minerals as it intends to get the mines operational over the next 2-3 years to support the growth of the electric vehicle (EV) industry.

The Geological Survey of India has found the presence of significant lithium reserves totalling 5.9 million tonnes in the Reasi district of Jammu and Kashmir. This is a big find as this rare earth metal is a key component of EV batteries and is in high demand globally.

Also, REE resource has been found in the coastal beach placer sands in parts of Kerala, Tamil Nadu, Odisha, Andhra Pradesh, Maharashtra and Gujarat and in the inland placers in parts of Jharkhand, West Bengal and Tamil Nadu. In fact, India has so far not exploited these minerals despite having the world’s fifth largest resource. REE resource is extensively used in all mobile phones, medical equipment and electric vehicles. It is important for the manufacturing of permanent magnets that are used in wind turbines and data storage systems. Questions emailed to the spokesperson for the ministry of mines remained unanswered.

According to the draft of the amendment proposed in Mineral (Other than Atomic and Hydro Carbons Energy Mineral) Concession Rule, 2016, in respect of lithium, the lithium metal prices will be calculated on the basis of the weekly price of lithium hydroxide or other compounds of the metal published by London Metal Exchange in a month.

With respect to REE, according to the draft amendment, the Indian Bureau of Mines will publish the ASP of Rate Earth Oxide on the basis of prices published by the United States Geological Survey (USGS). This would be the basis for states to determine the ASP of ores of REE.

GSI has so far handed one geological report for a block of REE and a block of lithium (after exploration) to state governments to enable them to auction these blocks. Geological reports of a few more blocks of REE have been prepared and will be handed over to states soon.