UPSC Prelims Practice Questions — CAPEX Support Scheme to Promote Critical Mineral Processing

Q1. A government wants to create domestic capacity in a capital-intensive industry where no plant yet exists and private projects are unviable at current market prices. With reference to a capital (CAPEX) subsidy and a production-linked incentive (PLI) as instruments for this purpose, consider the following statements: Which of the statements given above is/are correct?

  1. A capital subsidy lowers the upfront investment burden, whereas a PLI pays out only after production and sales have begun.
  2. Like a PLI, a capital subsidy rises with the volume of output that the plant eventually sells.
  3. Releasing a capital subsidy in tranches tied to investment and equity milestones links public money to actual progress in building the asset.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 2 and 3 only

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The CAPEX Support Scheme for Critical Mineral Processing supports beneficiaries through a subsidy on capital investment rather than an incentive linked to output.
  2. The high upfront cost of advanced equipment, multi-stage conversion and strict environmental safeguards makes domestic critical mineral processing commercially unviable under current market conditions.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. Country X mines large quantities of a battery mineral but has almost no capacity to refine it into high-purity intermediates. Global refining of this mineral is concentrated in a few countries, one of which periodically restricts exports of refined forms. Which of the following inferences can be drawn from the above?

  1. Raising mining output in Country X would, by itself, end its dependence on the refining countries.
  2. Battery manufacturers in Country X remain exposed to supply disruption even though the ore is mined at home.
  3. Building domestic refining capacity would reduce Country X's exposure to export restrictions imposed by the refining countries.
  • A. 3 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 2 only

Q4. In the value chain of a battery mineral, turning a mined nickel concentrate into battery-grade nickel sulphate is best classified as which of the following?

  • A. Upstream, alongside exploration and extraction of ore
  • B. Downstream, alongside battery cell and pack assembly
  • C. Secondary recovery, alongside recycling of battery scrap
  • D. Midstream, alongside refining of high-purity intermediates

Q5. With reference to the auction of mineral concessions under the Mines and Minerals (Development and Regulation) Act, 1957, as amended in 2023, consider the following statements: Which of the statements given above is/are correct?

  1. Before the 2023 amendment, the Central Government auctioned concessions for all minerals, and the amendment shifted this power to the states for critical minerals.
  2. The amendment empowered the Central Government to auction mining leases and composite licences for the critical and strategic minerals listed in a separate part of the First Schedule.
  3. After the amendment, the Central Government auctions concessions for every mineral, including minor minerals.
  • A. 2 and 3 only
  • B. 1 and 2 only
  • C. 2 only
  • D. 1 and 3 only

Q6. A processing scheme supports lithium plants that convert ores and concentrates, but not brines, into battery-grade products. It also requires nickel plants to produce Class-1 nickel or battery-grade nickel sulphate while recovering cobalt. Which of the following inferences can be drawn from the above?

  1. The scheme is geared towards the battery supply chain rather than towards conventional uses of these metals.
  2. Requiring cobalt recovery is meant to extract more value from the same nickel feedstock.
  3. The exclusion of brines shows that the country has no lithium-bearing brine resources.
  • A. 1, 2 and 3
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1 only

Q7. With reference to primary and secondary sources of critical minerals, consider the following statements: Which of the statements given above is/are correct?

  1. Extracting cobalt from spent lithium-ion batteries uses a secondary source, whereas refining a mined nickel concentrate uses a primary source.
  2. Once secondary recovery is scaled up, a country no longer needs primary processing capacity for battery minerals.
  3. A country that lacks mineable deposits of a critical mineral can still add to its domestic supply of that mineral through recycling.
  • A. 1 and 3 only
  • B. 1 only
  • C. 1, 2 and 3
  • D. 2 and 3 only