(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Inclusive Growth and issues arising from it.)
- Critical minerals are those minerals that are essential for economic development and national security, the lack of availability of these minerals or concentration of extraction or processing in a few geographical locations may lead to supply chain vulnerabilities and even disruption of supplies.
- They along with some rare earth elements, are essential for the world’s ongoing efforts to switch to greener and cleaner energy.
Critical Minerals and their role in Green Transition –
- As per International Energy Agency (IEA), the supply of minerals critical to the green energy transition could move close to levels needed to support climate pledges by 2030.
- Batteries, electric vehicles (EV), solar panels, windfarms, and transmission lines will all require vast volumes of critical minerals—cobalt, lithium, graphite, nickel, manganese, and rare earths.
- Critical minerals play a significant role in decarbonisation.
They are also required for fertilisers, construction, magnets for industries, transport, consumer electronics, defence, etc.
| Expert Committee under Ministry of Mines has identified a set of 30 critical minerals for India: These are Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium. Leading Resource States: Bihar, Gujarat, Jharkhand, Odisha, Tamil Nadu, Uttar Pradesh, Chhattisgarh and Jammu and Kashmir. |
Significance of Critical Minerals –
- Economic Development: Industries such as high-tech electronics, telecommunications, transport, and defence heavily rely on these minerals. Additionally, critical minerals are essential for green technologies like solar panels, wind turbines, batteries, and electric vehicles.
- India’s significant domestic demand and potential in these sectors, their growth can lead to job creation, income generation, and innovation.
- National Security: These minerals are vital for defence, aerospace, nuclear, and space applications, necessitating the use of high-quality and reliable materials capable of withstanding extreme conditions and performing complex functions.
- Environmental Sustainability: By 2030, India wants to set up 500 GW of non-fossil fuel power generating capacity. The availability of critical minerals (and rare earths) is crucial as it has massive plans to become net-zero by 2070.
Different Concerns Related to Critical Minerals in India –
- Resources nationalism is increasing: Nationalization of critical resources or sudden high levies on—mining companies is already increasing as resources-rich countries see their critical minerals as a means to exert more geopolitical influence. E.g. Latin America, which accounts for two-fifth of the world’s copper, a quarter of its nickel, and over half of its lithium reserves.
- Mexico also recently changed its mining code, substantially reducing the duration of mining concessions.
- Limited Domestic Reserves: India has limited reserves of critical minerals such as lithium, cobalt, and other rare earth elements.
- India heavily relies on imports for critical minerals like lithium and nickel, with 100% import reliance for lithium and nickel, and 93% for copper.
- Concentration of Critical Minerals in Select Countries: Australia has 55% of lithium reserves, China has 60% of the rare earths, Democratic Republic of Congo (DRC) has 75% of cobalt, Indonesia has 35% of nickel, Chile has 30% of copper reserves.
- Geopolitical Tensions and Potential Risk of Supply: It is important to address these challenges because global relations between nations have become more polarised, especially due to events like the US-China trade war and the Russia-Ukraine war. These conflicts have led to sanctions and disruptions in established trade patterns.
- Supply-Demand Dynamics: This rise in material prices will likely disrupt the production costs of devices like solar panels and electric vehicle.
Steps Taken by India to Promote Production –
- Adopting a Robust Three-Stage Process in Identification:
- Identifying the minerals critical to India, the panel, in the first stage, looked at the strategies of various countries such as Australia, USA, Canada, UK, Japan and South Korea.
- An inter ministerial consultation
- To derive an empirical formula for evaluating minerals criticality, taking cognizance of the EU methodology that considers two major factors – economic importance and supply risk.
- Setting Up Khanij Videsh India Ltd. Itis mandated to identify and acquire overseas mineral assets of critical and strategic nature such as lithium, cobalt and others so as to ensure supply side assurance.
- Allowing private sector in mapping, exploration and mining of critical minerals.
- US-led Minerals Security Partnership (MSP) India, too, has joined the MSP. The aim of the MSP is to bolster the critical minerals supply chain.
Path to decarbonisation and achieving net-zero goals by 2070 hinges significantly on overcoming these challenges and ensuring a sustainable supply of critical minerals. However, challenges exist, such as the concentration of resources in a few countries and China’s dominant position in processing and manufacturing. The government needs to take proactive actions regarding critical minerals to secure a steady supply of these essential resources.
