India’s Reliance on China for Critical Minerals

Source: This article on India’s Reliance on China for Critical Minerals  has been created based on India’s reliance on China for critical minerals published in The Hindu on 24^th December 2024.

UPSC Syllabus Topics: GS1- Distribution of Key Natural Resources across the world (including South Asia and the Indian sub-continent)

Context: The article provides an in-depth analysis of India’s reliance on China for critical minerals, highlighting the challenges and potential solutions to this dependency. It contextualizes the issue within the broader framework of global mineral supply chains, focusing on China’s dominant role and India’s vulnerabilities.

What are critical minerals, and why are they important?

1. Critical minerals are resources that are essential for a country’s economic development and national security.
2. In 2023, the Ministry of Mines in India identified 30 such minerals, highlighting that the country is entirely dependent on imports for 10 of them.

Does China dominate the critical minerals sector?

1. Yes, China has achieved unparalleled dominance in the critical minerals sector. This is due to its vast resource base and strategic investments.
2. China has discovered 173 types of minerals, including copper, lithium, gallium, and crystalline graphite. In 2022, the country identified 132 new mineral deposits, of which 34 were large-scale.
3. Additionally, China controls significant portions of global processing, refining 87% of rare earth elements, 58% of lithium, and 68% of silicon.
4. It has also secured overseas mining projects and established robust midstream refining capabilities, which have strengthened its global supply chain dominance.

How does China weaponize its critical mineral exports?

1. China strategically restricts the export of minerals critical to industries in Western nations and their allies, such as semiconductors and batteries.
2. For instance, China imposed a rare earth embargo on Japan in 2010 and recently restricted the export of antimony, gallium, and germanium.
3. In December 2023, it banned the export of rare earth extraction and processing technologies.
4. However, China carefully balances such restrictions by avoiding actions that might harm its domestic industrial enterprises or heavily export-dependent sectors.

Which minerals does India heavily depend on China for?

India depends heavily on China for six critical minerals, with significant import reliance for each:

• Bismuth: India imports 85.6% of its requirements from China. This mineral is mainly used in pharmaceuticals and chemicals.
• Lithium: India’s reliance on China is 82%. Lithium is a crucial component in electric vehicle (EV) batteries and energy storage systems.
• Silicon: India imports 76% of its silicon from China. This mineral is essential for semiconductors and solar panels.
• Titanium: India depends on China for 50.6% of its titanium needs. Titanium is widely used in aerospace and defence applications.
• Tellurium: India sources 48.8% of tellurium from China. This mineral is vital for solar power and thermoelectric devices.
• Graphite: India relies on China for 42.4% of its graphite, which is indispensable for EV batteries and steel production.

Why does India rely on imports despite having domestic resources?

1. India’s dependency on imports stems from several structural challenges. Many critical minerals are deep-seated, requiring advanced exploration and mining technologies.
2. Such high-risk investments have deterred private sector participation due to inadequate policy incentives.
3. Additionally, India’s processing capabilities are limited.
4. For example, India has not been able to process its recently discovered 5.9 million tonnes of lithium in Jammu and Kashmir due to a lack of technology to extract lithium from clay-based reserves.

What steps is India taking to reduce dependency on China?

India has initiated multiple measures to address its reliance on China:

1. Securing Overseas Assets: India established KABIL, a joint venture of three state-owned companies, to secure mineral resources abroad.
2. Global Partnerships: The country has joined international initiatives like the Minerals Security Partnership and the Critical Raw Materials Club to diversify its supply sources.
3. Investment in Research: Institutions such as the Geological Survey of India and the Council for Scientific and Industrial Research (CSIR) are conducting research to advance exploration and extraction technologies.
4. Recycling and Circular Economy: India is promoting recycling and circular economy practices to reduce dependence on virgin mineral resources.
5. Production-Linked Incentives (PLI): The government has introduced incentives for extracting critical minerals through recycling processes.

What are the challenges in reducing dependence on China?

1. Reducing India’s dependency on China requires sustained investment and long-term policy commitment.
2. Developing advanced exploration, mining, and processing capabilities will take time. Additionally, the transition to a self-reliant critical mineral ecosystem will necessitate significant technological advancements and international collaboration.
3. Despite these challenges, India’s initiatives provide a promising foundation for addressing its vulnerabilities in the critical minerals sector.