Why in the news?

  • The Ministry of Mines issued the guidelines for the Critical Mineral Recycling Incentive Scheme.

Critical Mineral Recycling Incentive Scheme

  • What is it?:
    • It is to promote recycling of critical minerals from secondary sources such as e-waste, lithium-ion battery (LIB) scrap, and scrap from end-of-life vehicles (e.g. catalytic converters).
    • The scheme is part of the broader National Critical Mineral Mission (NCMM).
  • Scheme Duration: The scheme will run over six years, from FY 2025-26 to FY 2030-31.
  • Objectives:
    • To boost domestic recycling capacity of critical minerals, as a near-term strategy while exploration, mining, and processing projects ramp up. 
    • To reduce import dependency for critical minerals (e.g. lithium, cobalt, nickel, rare earths) essential to clean energy, electronics, EVs, etc. 
    • To catalyze investment, create jobs, and support a circular economy in the mineral sector.
  • Key Features:
    • Feedstock: E-waste, LIB scrap, end-of-life vehicle scrap (e.g. catalytic converters)
    • Beneficiaries: Large, established recyclers; small/new recyclers & startups (1/3 of outlay earmarked for small/new ones)
    • CapEx Subsidy: 20% subsidy on plant & machinery, associated utilities, if production starts within the specified timeframe (a reduced subsidy applies beyond that)
    • Cap to entities:
      • Large entities: total incentive (CapEx + OpEx) capped at ₹50 crore; OpEx subsidy cap ₹10 crore.
      • Small entities: total incentive capped at ₹25 crore; OpEx subsidy cap ₹5 crore.
  • Significance:
    • Recycling offers a shorter lead time compared to mining and primary production, enabling earlier supply security.
    • Supports resource efficiency, reduces waste, and lowers environmental footprint of raw material sourcing.
    • Incentives could stimulate better extraction / separation technologies, process improvements, and scale in the recycling sector.
    • The earmarking of one-third of funds for smaller/new recyclers helps avoid concentration and gives startups / SMEs access.
  • Challenges:
    • Extracting value from mixed waste streams is technically challenging, especially for rare earths, lithium, cobalt, etc.
    • Ensuring consistent and sufficient volumes of suitable e-waste, battery scrap, and end-of-life vehicle scrap may be a constraint, especially in certain regions.
    • Financial viability challenges to the recycling firms.
    • Monitoring, validating incremental sales, ensuring compliance, disbursing subsidies efficiently, dealing with delays- all need institutional capacity.
    • The CapEx subsidy is contingent on starting production within a timeframe; delays may reduce subsidy beneficially for too many.