Critical Minerals in the 21st Century

Source-This post on Critical Minerals in the 21st Century has been created based on the article “Breaking the minerals monopoly” published in “Business Standard” on 4 July 2024.

UPSC Syllabus–GS Paper-3- Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Context-The article highlights the geo-economic and geo-strategic significance of Critical Minerals In the 21st century. Critical minerals and rare earths are crucial for industries like electronics, renewable energy, electric vehicles, defense, aerospace, and medical devices. The International Renewable Energy Agency projects that renewables will make up 91% of the energy mix by 2050, driving demand for minerals such as silicon, silver, lithium, neodymium, and dysprosium.

The rising global demand has made minerals critical strategic assets and geopolitical tools. They are mainly found in a few nations, with China being dominant, holding significant reserves of dysprosium (50%), neodymium (50%), and graphite (65%).

What are the geostrategic implications of China’s dominance in supply of Critical Minerals?

1) Strategic Agreements –China has bolstered its position through strategic agreements in Africa, Latin America, Central Asia, and Australia, facilitated by initiatives such as the Belt and Road Initiative (BRI). For ex- BRI investment in mineral exploration and processing across Ghana, Guinea, Niger, Sierra Leone, and Mali secured exclusive access to bauxite and lithium.

2) Global Processing Monopoly- China dominates global mineral processing with substantial shares: 80% for graphite, 100% for dysprosium etc. This industrial advantage, driven by economies of scale, has lowered processing costs and erected barriers to entry. This has reinforced China’s grip on mineral supply chains.

3) Weaponization of Critical Minerals- China’s monopoly on critical minerals has raised concerns about their use as geopolitical tools. For example, in 2010, China restricted rare earth exports to Japan during a territorial dispute. In 2023, following US semiconductor technology restrictions, China imposed controls on germanium and gallium exports

What is the significance of Critical Minerals for India?

1) Net-zero Emissions– India’s ambitions for net-zero emissions by 2070 and its expansion in semiconductor, defense, nuclear, and space industries highlight the importance of minerals like lithium, nickel, copper etc.

2)  Supply Chain Resilience- India relies heavily on imports for these minerals, highlighting the need for secure supply chains due to potential geopolitical pressures and vulnerabilities in critical sectors. For ex- 100% import dependence for cobalt, nickel, and lithium etc.

3) Global Lithium Refining Leadership -India, like in oil refining, has the potential to lead globally in lithium refining and resolve global challenges in critical minerals.

Read more- Lithium Reserves in India – Challenges and Way forward

What are the challenges in exploration of Critical Minerals?

1) Raw Material Export-India has 210 million tonnes of graphite and 665 million tonnes of ilmenite and rutile reserves.However,their production is minimal, with most exported as raw material.

2) Focus on Bulk Materials-Many critical minerals remain undiscovered because of the focus on bulk minerals, neglecting deeper-seated critical minerals.

3) Lack of Investment -Exploration was limited to government entities, which hindered investment and the adoption of advanced prospecting technologies.

4) Lack of Mineral Processing Capabilities -India does not have a robust mineral processing capabilities to meet its specific end-use requirements and handle low-concentration ores. Current capacities fall below international productivity norms and are inadequate.

What are some recent initiatives undertaken by the government to enhance production of Critical Minerals?

1) The government has identified 30 critical minerals and taken over their prospecting to streamline state efforts.

2) The Geological Survey of India has initiated over 250 projects to explore deep-seated critical minerals.

3) Amendments to the Mines and Minerals Act in 2023 and the Offshore Areas Minerals Act now permits private sector entry through auctions. In 2019, India allowed 100% foreign direct investment.

4) Certain minerals previously classified as atomic have been reclassified, facilitating private-sector mining.

5) Offshore blocks are scheduled for auction, creating new opportunities.

6) India has launched startup challenges to develop advanced processing technologies. There are initiatives to stockpile key minerals for sectors like renewable energy, automotive, space, defence, and semiconductors.

7) India is collaborating with other countries; Khanij Bidesh India is assisting Argentina in lithium exploration and discussing lithium and cobalt blocks in Australia.

8) India joined the Mineral Security Partnership, a US initiative involving 13 countries and the EU.

What should be the way forward?

1) Investment in Beneficiation and Processing Facilities -India should invest in beneficiation and processing facilities in Africa to promote local economies and sustainable relationships.

2) Public-Private Partnership-The government should involve both the private sector and public-sector undertakings to accelerate international initiatives.

3) Enhance Mineral Processing Capabilities -India needs to enhance its mineral processing capabilities to meet specific end-use requirements and handle low-concentration ores, as current capacities are insufficient and below international norms.

4) Path to Global Leadership– India can emulate Indonesia’s success in nickel to become a global leader in critical minerals, utilizing access to both domestic and international raw materials.

5) Aligning Mineral Incentives-The production-linked incentive scheme for minerals should align with global aspirations, creating employment opportunities.

6) Addressing the Gap- Policy initiatives have been implemented, but there is an urgent need for investments and technological advancements.

Question for practice

Why are Critical Minerals important for India? What recent steps has the government taken to boost their production?