Building resilient mineral supply chain

Source– The post is based on the article “Building resilient mineral supply chain” published in The Hindu on 11th October 2022.

Syllabus: GS3- Economy

Relevance– Mines and minerals sector

News- The article explains the challenges for securing access to key minerals. It also provides suggestions to secure the mineral supply.

In his Independence Day address, Prime Minister Narendra Modi emphasised the need to have aatmanirbharta in energy by focusing on clean energy technologies.

The Indian government established Khanij Bidesh India Limited (KABIL) in 2019 with the mandate to secure mineral supply for the domestic market.

Why is there a renewed focus on the need for self-reliance in the energy sector?

The Ukraine crisis led to concerns over pricing and availability of oil and gas.

India imports 85% of oil and half of gas. Imported inflationary pressures pose risks to macroeconomic growth and stability.

Why is securing access to key minerals a challenging task?

First, reserves are often concentrated in regions that are geopolitically sensitive. These regions do not perform well from an ease of doing business perspective.

Second, a portion of existing production is controlled by geostrategic competitors. For example, China has considerable influence in cobalt mining in the Democratic Republic of Congo.

Third, future mine production is often tied up in advance offtake agreements by buyers from other countries.

What are suggestions for policymakers to secure mineral supply for them?

First, figure out the mineral requirements of the domestic industry. An inter-ministerial task force should be set up. A five-year road map with clear targets for deployment and indigenous manufacturing across clean energy applications need to be created.

Second, Government should coordinate with the domestic industry to determine where strategic interventions by the government would be necessary for the purpose. KABIL could collaborate with industry to bolster its market intelligence capabilities for tracking global supply-side developments.

Third, if there are no conducive investment opportunities, KABIL should sign offtake agreements with global mineral suppliers to secure future production.

Fourth, Government should jointly invest in mining assets with geostrategic partners. KABIL should make investments in countries where private sector investment is risky.

The government supports technologies that utilise domestically available materials.

We need to develop policies aimed at recycling minerals.