Why is it in the News?

By 2030, India wants to set up 500 GW of non-fossil fuel power generating capacity but the problem is that the availability of the minerals is not enough. One needs to process it and manufacture the final product which also means access to technology.

Background:

• As the world shifts towards decarbonization and faces growing demand for critical minerals, governments worldwide are strategically securing access to these vital resources.
• In alignment with this trend, the Indian government has amended mining laws to encourage private sector involvement in the extraction and processing of critical minerals.

Importance of Critical Minerals:

• Driving Decarbonization and Clean Energy Technologies: Critical minerals are pivotal for clean energy technologies such as solar PV plants, wind farms, and electric vehicles, essential for global decarbonization efforts.
  •   According to the International Energy Agency (IEA), a substantial portion of minerals like copper, rare earths, nickel, cobalt, and lithium will be crucial for meeting Paris Agreement targets.
• Transforming the Transportation Sector: Electric vehicles (EVs) rely heavily on critical minerals like lithium, cobalt, and nickel for their battery production.
  •  As countries shift towards EV adoption, the demand for these minerals is expected to soar, driving sustainable transportation initiatives.
• Essential in Consumer Electronics: Critical minerals are vital for producing consumer electronics such as smartphones, laptops, and tablets.
  • Rare earth elements and other minerals enable the miniaturization and enhanced performance of electronic devices.
• Supporting the Construction Industry: Critical minerals contribute to the production of high-strength alloys, cement, and other building materials in the construction sector.
  • These minerals enhance the durability and efficiency of construction materials, promoting sustainability in infrastructure projects.
• Ensuring Defence and National Security: In the defense sector, critical minerals are indispensable for advanced weaponry and communication systems.
  • Securing a stable supply of these minerals is critical for maintaining national security and technological superiority.
• Vital for Fertilizers and Agriculture: Minerals like phosphorus and potassium are essential components in fertilizers, crucial for enhancing crop yields and ensuring global food security.
• Crucial for Industrial Magnets: Neodymium, praseodymium, and dysprosium, critical minerals, are crucial for manufacturing magnets used in various industries.
  • These magnets are integral components in technologies ranging from electric motors to medical devices.

Geopolitical Dynamics of Critical Minerals and Global Ramifications:

• Economic Dynamics: The geographical concentration of critical mineral resources in select countries like Australia, China, the Democratic Republic of Congo (DRC), Indonesia, and Chile fosters economic dependencies.
  • Nations with substantial reserves enjoy advantages in revenue generation, job creation, and overall economic development, potentially leading to global economic disparities.
• Geopolitical Power Play: The strategic significance of critical minerals turns their extraction and processing into geopolitical instruments, enabling nations to wield influence on the global stage.
  • China, notably, has leveraged its dominance in rare earths to exert political pressure, exemplified by restrictions on exports to countries such as the US and Japan.
  • China's control over critical minerals, coupled with its monopolized processing capacity, carries significant geopolitical implications, prompting international collaborations like the US-led Minerals Security Partnership (MSP) to secure supply chains and reduce dependence on authoritarian regimes.
• Supply Chain Vulnerability: The concentration of critical mineral resources in specific regions raises concerns about the vulnerability of global supply chains.
  • Political instability, trade conflicts, or other geopolitical events in major producing nations can disrupt the supply of critical minerals, adversely affecting industries reliant on them.

India's Objectives and Hurdles in Acquiring Critical Minerals:

• Pursuit of Decarbonization Goals and Energy Transition: India has outlined ambitious objectives for decarbonization, aiming for net-zero emissions by 2070 and establishing 500 GW of non-fossil fuel power generation capacity by 2030.
  • Embracing renewable energy sources, electric vehicles, and sustainable practices underscores India's dedication to combatting climate change.
• Heavy Reliance on Imports: Despite possessing identified reserves, India heavily depends on imports to meet its demand for critical minerals.
  • This import dependency presents significant challenges, exposing the nation to global market fluctuations, supply chain disruptions, and potential geopolitical tensions.
• Strategic Agreements for Exploration: Acknowledging the necessity to reduce import reliance, India has forged strategic agreements, such as the one with Australia, to jointly explore critical minerals like lithium and cobalt.
  • Collaborations with resource-rich nations aim to secure access to raw materials and diversify sources beyond traditional suppliers.
• Lack of Domestic Processing Capacity: Identifying critical minerals marks only the initial step; subsequent processing and manufacturing require advanced technology and infrastructure.
  • India encounters challenges in building domestic processing capacity, contributing to an extended gestation period before achieving self-reliance.
  • Apart from raw material availability, accessing advanced processing technology remains crucial, emphasizing the importance of technology transfer and collaborative ventures with proficient countries.
• Participation in International Collaborations: India's engagement in the US-led MSP illustrates its dedication to fostering strategic partnerships for securing the critical minerals supply chain.
  • The MSP encompasses countries with critical mineral deposits and access to processing technology, fostering a collective endeavor to surmount challenges.

Noteworthy Actions Undertaken by the Indian Government:

• Identification of Critical Minerals: In July 2023, India took a significant stride by identifying a list of 30 critical minerals, distinct from rare earths.
  • Each mineral was selected based on criteria such as disruption potential, substitutability, cross-cutting usage, import reliance, and recycling rates.
  • The identified minerals are predominantly concentrated in states and union territories, including Bihar, Gujarat, Jharkhand, Odisha, Tamil Nadu, Uttar Pradesh, Chhattisgarh, and Jammu and Kashmir.
• Amendment of Existing Mining Laws: Subsequently, in November 2023, the Indian government amended existing mining laws to facilitate private sector participation in the auction of 20 blocks containing critical minerals and rare earths.
  • This amendment signifies a notable shift in India's mineral sector, unlocking opportunities for private enterprises to engage in the extraction and processing of these vital resources.

Conclusion

There is a mounting concern that the limited access to critical minerals could pose a substantial obstacle to India's ambitious journey towards decarbonization. The achievement of decarbonization objectives hinges on surmounting challenges associated with import reliance, processing capabilities, and technological advancements.