Q: Match the critical minerals (List I) with their newly approved royalty rates under the November 2025 Cabinet decision (List II): List I: A. Caesium B. Zirconium C. High-grade Graphite (>= 80% carbon) D. Low-grade Graphite (< 80% carbon) List II: 1. 1% of Average Sale Price (ASP) 2. 2% of Average Sale Price (ASP) 3. 3% of Average Sale Price (ASP) 4. 4% of Average Sale Price (ASP) Select the correct code:

(a) A-2, B-1, C-2, D-4 — Under the revised rates notified by the Cabinet, Caesium and Rubidium both attract a royalty of 2% of ASP. Zirconium attracts 1% of ASP. High-grade graphite (80% or more fixed carbon) is charged at 2% of ASP, and low-grade graphite (less than 80% fixed carbon) is charged at 4% of ASP.

Q: Assertion (A): The Union Cabinet shifted the royalty rate of graphite to an ad valorem basis in 2025. Reason (R): An ad valorem royalty structure ensures that the royalty accruals proportionately reflect the fluctuations in market prices across different grades of the mineral. Select the correct answer:

(a) Both A and R are true and R is the correct explanation of A. — The government explicitly stated that fixing the royalty rate of graphite on an ad valorem (value-based) basis rather than a specific (per-tonne) basis allows the state to capture proportionate value as prices fluctuate in the market, making R the correct and logical explanation for the policy shift in A.

Question 1

The Central Government collects and retains the royalty revenue for critical and strategic minerals.

Accepted Answer

Under the MMDR Act, 1957, while the Central Government has the authority to notify and revise royalty rates for critical minerals, the actual revenue is collected and kept by the State Governments where the mines are located.

Question 2

An 'ad valorem' royalty is a fixed fee charged per tonne of mineral extracted.

Accepted Answer

Ad valorem translates to 'according to value'. It is calculated as a percentage of the mineral's Average Sale Price (ASP), unlike a specific royalty which is a fixed rupee amount per unit of weight or volume.

Question 3

Consider the following statements regarding the November 2025 revision of royalty rates for critical minerals:
1. The royalty structure for Graphite was shifted from an ad valorem basis to a fixed rupees-per-tonne basis.
2. The newly approved royalty rate for high-grade graphite (80% or more fixed carbon) is higher than that of low-grade graphite.
3. The revenue generated from these revised royalties will be collected and retained by the Union Government to fund the National Critical Minerals Mission.
How many of the above statements are correct?

Accepted Answer

(d) None — Statement 1 is incorrect: Graphite shifted FROM a per-tonne basis TO an ad valorem basis. Statement 2 is incorrect: High-grade graphite (>=80% carbon) attracts a lower 2% ASP royalty, whereas low-grade attracts a higher 4% ASP royalty. Statement 3 is incorrect: Under the MMDR Act, royalty revenue is collected and retained by the respective State Governments, not the Union Government.

Question 4

Match the critical minerals (List I) with their newly approved royalty rates under the November 2025 Cabinet decision (List II):

List I:
A. Caesium
B. Zirconium
C. High-grade Graphite (>= 80% carbon)
D. Low-grade Graphite (< 80% carbon)

List II:
1. 1% of Average Sale Price (ASP)
2. 2% of Average Sale Price (ASP)
3. 3% of Average Sale Price (ASP)
4. 4% of Average Sale Price (ASP)

Select the correct code:

Accepted Answer

(a) A-2, B-1, C-2, D-4 — Under the revised rates notified by the Cabinet, Caesium and Rubidium both attract a royalty of 2% of ASP. Zirconium attracts 1% of ASP. High-grade graphite (80% or more fixed carbon) is charged at 2% of ASP, and low-grade graphite (less than 80% fixed carbon) is charged at 4% of ASP.

Question 5

Assertion (A): The Union Cabinet shifted the royalty rate of graphite to an ad valorem basis in 2025.
Reason (R): An ad valorem royalty structure ensures that the royalty accruals proportionately reflect the fluctuations in market prices across different grades of the mineral.
Select the correct answer:

Accepted Answer

(a) Both A and R are true and R is the correct explanation of A. — The government explicitly stated that fixing the royalty rate of graphite on an ad valorem (value-based) basis rather than a specific (per-tonne) basis allows the state to capture proportionate value as prices fluctuate in the market, making R the correct and logical explanation for the policy shift in A.

Cabinet Rationalises Royalty Rates for Critical Minerals

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