Critical minerals: Auction and its importance

Source– This post is based on the article “Mining for critical minerals: what is the auction process, and why is it important?” published in “The Indian Express” on 6th December 2023.

Why in the News?

In November 2023, Government started first ever critical minerals auction process for commercial mining by private sector. This is the first time that rights related to the mining of lithium ore are also being auctioned to private parties.

What are Critical Minerals?

1) These are minerals that are essential for economic development and national security, and the lack of availability of these minerals could potentially lead to supply chain vulnerabilities.

2) In July 2023, the Government listed 30 minerals as ‘Critical Minerals’. This includes lithium, rare earth elements, graphite, etc.

Where are these Critical Mineral Blocks?

1) The auctions involves 20 blocks are spread over eight states (Tamil Nadu, Odisha, Bihar, Uttar Pradesh, Gujarat, Jharkhand, Chhattisgarh, and Jammu & Kashmir)

2) Of these, 4 blocks are being auctioned for a Mining Licence (ML) and the remaining 16 blocks for a Composite Licence (CL).

Note-
a. Mining Licence: once the licence is granted, the licensee can begin mining operations after obtaining the requisite clearances.
b. Composite Licence: allows the licensee to conduct further geological exploration of the area to ascertain evidence of mineral contents. Based on its findings,they can make an application to the relevant state government to convert their CL to an ML.

Why is the Auction of these Critical Minerals important?

1) Significance for economy: Critical minerals are essential for our country’s economic development and national security.

2) Minerals of the future: These minerals are utilised in key sectors such as vehicle batteries, energy storage devices, consumer electronics, etc.

3) Import Dependence: Currently, India is 100 percent reliant on imports for its lithium and nickel demand. For copper, this figure is 93 per cent. This has implications for India’s balance of payment.

4) Supply chain vulnerabilities: Concentration of their extraction or processing in a few countries like China exposes India to supply chain disruptions.

What are the Steps taken by the Government for the Promotion of Critical Minerals?

Click Here to read

UPSC Syllabus- Science & Technology/ Geography