According to two government sources, the federal government of India plans to fix royalties for mining companies mining lithium at 3% of the prevailing price on the London Metal Exchange (LME).
India has been exploring ways to secure lithium supplies. Lithium is a key raw material for electric car batteries. In February, India discovered its first lithium deposits in the federally administered state of Jammu and Kashmir.
The government is expected to auction the newly discovered lithium deposits, estimated to hold 5.9 million tonnes, later this year.
Sources said at least 12 Indian and foreign companies, Such as Adani Enterprises, Vedanta Ltd, Reliance Industries, Jindal Steel and Power Ltd, Himadri Chemicals and South Korea LX International is likely to participate in the auction. The sources asked not to be identified because the information is not public.
India's cabinet is expected to consider a proposal to fix lithium mining royalties at 3 percent of the current rate on the London Metal Exchange, they said.
The mining ministry did not immediately respond to a request for comment.
The sources said the royalties would be paid to the Jammu and Kashmir regional government, which would be a significant step towards India's first lithium mine auction.
Royalties are regulated by the Union Ministry of Mines of India, but the revenue goes to the state government or the federal jurisdiction.
Sources said India had previously used the LME benchmark to determine royalties for bauxite mining.
"We looked at the royalties from other lithium mining countries," one of the sources said. "Australia's royalties are also 3% of the LME, while Argentina, Bolivia and Chile (known as the Lithium Triangle) are 4.5% of the LME."
India's planned auction of its lithium reserves - estimated to be the seventh largest in the world - comes as major economies push to secure lithium supplies.
The United States, Canada and other countries have formed a new partnership aimed at securing supplies of key minerals, including lithium.
