Mining Stocks Advance After Cabinet Approves Royalty For Extracting Rare Minerals
The move is expected to encourage indigenous mining, reduce imports and set up related industries and infrastructure projects.
Shares of mining stocks advanced on Thursday after the government approved royalties for mining three strategic minerals.
The three strategic minerals approved by the cabinet ministers on Wednesday are lithium, niobium, and rare earth elements, according to a government statement.
The move is expected to encourage indigenous mining, reduce imports, and set up related industries and infrastructure projects, along with creating employment opportunities in the mining sector, the ministry said in the press release.
The royalty rates set by the government are:
Lithium: 3% of the London Metal Exchange price
Niobium: 3% of the average sale price (both for primary and secondary sources).
REE: 1% of the average sale price of rare earth oxide.
"Royalty rate on minerals is an important financial consideration for the bidders in the auction of blocks. Further, manner for calculating the average sale price of these minerals has also been prepared by the Ministry of Mines, which will enable the determination of bid parameters," the release said.
Shares of MOIL Ltd. surged over 13%, GMDC Ltd. jumped over 8%, and NMDC Ltd. was up 5.92% as of 10:45 a.m. That compares with a 0.05% decline in the benchmark NSE Nifty 50.
Shares of National Aluminium Company Ltd., Hindustan Copper Ltd., and Coal India Ltd. also surged after the release of royalty rates by the government.
