• April 23, 2023

Critical minerals & supply chain challenges

GS 3 Energy

In Context

• A recent working paper from the Centre for Social and Economic Progress (CSEP) assesses the criticality levels of 43 specific minerals for India based on their economic significance.

More about the critical minerals:

About

• Critical minerals are the essential building blocks of modern technologies and are susceptible to supply chain disruptions.
• These minerals are currently utilized in the production of mobile phones, computers, batteries, electric vehicles, and environmentally friendly technologies such as solar panels and wind turbines.

Lists of critical minerals

• Different countries construct their own lists based on their unique requirements and strategic considerations.
• Graphite, lithium, and cobalt, which are utilized in the production of EV batteries;
• Rare earths, which are used to make magnets, and
• Silicon, which is a key mineral for making computer chips and solar panels.
• Aerospace, communications, and defense industries rely on a number of these minerals for the production of fighter jets, drones, radio sets, and other essential equipment.

India’s critical minerals

• Among the 22 minerals deemed essential for India are antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium.
• While India has a significant mineral geological potential, many minerals are not readily available in the country.

Criticality of these Minerals:

• As nations throughout the globe accelerate their transition to clean energy and the digital economy, these vital resources are indispensable to the ecosystem that drives this transformation.
• Any supply disruption can jeopardize a country’s economy and strategic autonomy if it is overly reliant on others to acquire critical minerals.
• However, these supply concerns exist due to limited availability, rising demand, and a complex value chain for processing.
• Hostile administrations or politically unstable regions can frequently disrupt the complex supply chain.

Challenges

• India faces global and domestic challenges in assuring resilient critical minerals supply chains.

International Challenges

China

• China, the most dominant player in the critical mineral supply chains, still struggles with Covid-19-related lockdowns.
• As a result, the extraction, processing and exports of critical minerals are at risk of slowdown.

Russia Ukraine war

• Russia is a significant producer of nickel, palladium, titanium sponge metal, and scandium, a rare earth element.
• Titanium is one of the country’s main exports. In addition, it has reserves of lithium, cobalt, graphite, and rare earth elements such as tantalum, niobium, and beryllium. The conflict between the two nations has implications for the supply chains of these vital minerals.

Shifting Balance of power

•  As the balance of power across continents and countries alters, the strategic partnership between China and Russia may impact the critical mineral supply chains.
• Consequently, developed nations have devised partnership strategies, such as the Minerals Security Partnership (MSP) and the G7’s Sustainable Critical Minerals Alliance, while developing nations have been left out.

Domestic challenges:

Scarce reserves

• Minerals, such as copper, manganese, zinc, and indium, would be required in greater quantities for the production of renewable energy technologies, such as solar panels and wind turbines.
• Similarly, the transition to electric vehicles would necessitate increasing quantities of minerals, such as copper, lithium, cobalt, and rare earth elements. However, India does not have many of these mineral reserves, or its needs may exceed its supply, necessitating the reliance on foreign partners to meet domestic needs.

Inadequate listing

• The Mines and Minerals (Development and Regulation) (MMDR) Act of 1957 includes on its list of atomic minerals a number of essential and strategic minerals.
• However, the current policy paradigm reserves these minerals exclusively for the public sector.

Suggestions and Way Forward :

Creating a new list

•  Due to the growing significance of critical and strategic minerals, it is imperative that a new inventory of these minerals be included in the MMDR Act.The list may contain minerals such as molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, and the platinum group of elements, as well as fertiliser minerals such as glauconitic, potash, and phosphate (without uranium).These minerals must be prospected, explored, and exploited with the utmost urgency, as any delays could jeopardize India’s emissions reduction and climate change mitigation goals.

Encouraging exploration

• Reconnaissance and exploration of minerals must be encouraged, with special focus on deep-seated minerals.
• This will require a concerted effort from the government, ‘junior’ miners, and major mining companies.

Processing & assembly

•  India must establish where and how the processing of minerals and assembly of vital equipment containing minerals will take place.

Securing supply chain

• Additionally, India must actively participate in bilateral and multilateral arrangements for constructing reliable and resilient supply chains for critical minerals.

Periodic assessment

• Furthermore, the assessment of critical minerals for India needs to be updated every three years to keep pace with changing domestic and global scenarios.

AatmaNirbhar in critical minerals

•  India needs a strategy for critical minerals that includes measures aimed at achieving AatmaNirbhar (self-sufficiency) in critical minerals required for sustainable economic growth and green technologies for climate action, national defense, and affirmative action for protecting the interests of affected communities and regions.

National critical minerals strategy

•  A national critical minerals strategy for India, based on the minerals identified in this study, can help prioritize supply risks, domestic policy regimes, and environmental concerns.