Decarbonization and energy transition, that is the shift away from fossil fuels to renewables is primarily based on solar and wind power. But converting solar and wind energy into usable power is where critical minerals which have specific electronic optical or magnetic properties are used in the process of converting natural energy into usable power. They become critical as they enhance electrical conductivity, light absorption and they add generation efficiencies as well as durability to the items whether they’re solar panels or wind turbines with permanent magnets. The catalysts used for hydrogen also presently use very expensive and rare metals like platinum and iridium. Batteries have always required special minerals but in EVs they are the main source of power and therefore they require very large amounts of minerals. Modern technologies, electronics, renewable energy systems, and advanced manufacturing are absolutely dependent upon critical minerals. The sheer demand, their high economic importance, the fact that they are susceptible to supply disruption due to their concentration of sources and lack of good, affordable substitutes is making these metals ‘critical.’
Just as oil resources are inextricably linked to the history of global diplomacy in the 20th century, rare earth metals and other critical minerals are in a sense being added to the resources which are critical to our future.
Given India’s substantial geological potential, it is important that as a industrialising country with a declared intention to move ahead as a self-reliant nation have control over our own mining and metallurgy. Particularly now when India is trying to build its defence industries to supply the armed forces on a self-reliant basis the need for critical inputs becomes a matter of national security and which cannot be ignored.
Strategies that Nations are Adapting to Secure Critical Minerals:
The world’s major economic powers are all racing to secure critical mineral availability and reserves. The United States under President Trump came out with a detailed strategy a few months after he took over and one of the things it did was to revive the strategic mineral stockpile which was created after the second World War managed by the defence logistic agency of the Pentagon. China has had a critical mineral strategy since March 1986 when Deng Xiaoping endorsed the 863 Program, named after its date of establishment, and the result is that without having any substantial reserves, it dominates critical mineral mining and processing.
Japan learned to its great cost the importance of mineral security in 2010-11 when China cut off Rare Earth supplies and presently Japan Organization for Metals and Energy Security (JOGMEC) which is a public sector company maintains a stockpile of 60 days requirement of 34 key minerals and metals. South Korea also has started creating a mineral stockpile with a lot of dependence on the private sector. The OECD and the International Energy Agency are studying critical minerals for green transition and even NATO has looked at supply chain security including critical metals.
European countries rely more on increasing domestic mining and diversifying foreign supplies and enhancing supply chain security. On 23 May 2024, the EU’s Critical Raw Materials Act (CRMA) entered into force aiming to incentivize the extraction of raw materials in the territories of EU Member States, increase recycling efforts totaling up to 25 % of annual consumption and reducing dependency for any critical raw material on a single non-EU country to less than 65 % by 2030.
The vulnerability to reliance on China for Rare Earth elements processed for use is one that many countries have woken up to. As a result, a common thread that runs in the strategies that nations are adopting is to reduce dependence on China for critical minerals. Dependence on foreign suppliers of these materials carries both geo-political and financial risks.
India’s Mining Potential Has Remained Untapped:
Most experts agree that India has great geological potential for a whole range of minerals and can substantially increase its output. However, the country’s mining sector has not achieved its full potential. According to analysts only 10 percent of India’s obvious geological potential has been adequately explored and only two percent has actually reached the stage of mining.
After neglecting the mining of critical minerals for decades, India is now employing a mix of strategies to reduce risks in the supplies. It has begun identifying which minerals are the most critical and explore these minerals on its own territory but is also trying to buy into mineral reserves in foreign countries. It has listed 30 minerals, including lithium, as “critical” for nuclear energy, renewable and other sectors, to give a fillip to the energy transition and meet the country’s ambition for cleaner technologies. In its target to increase non-fossil energy capacity to 500 Gw by 2030 the lithium mining and processing will play a significant role. After preliminary exploration identifying the reserves were carried out in several states, lithium or ‘white gold’ reserves were discovered in Jammu & Kashmir, Rajasthan, Karnataka, and Jharkhand.
India Begins to Secure its Supply chains of Critical Minerals:
Earlier this year the government held its first critical mineral auction. For now there has been tepid response to the auctions possibly because of apprehensions over critical mineral mining being a resource devourer that can easily take 8-10 years for full-capacity commercial production. Yet lesser-known players are entering the sector. For instance the the Katghora Lithium and Rare Earth Element (REE) block was bagged by Kolkata’s Maiki South Mining, the Akharkata Graphite Block in Odisha was won by Kundan Gold Mines, the Iluppaikudi Graphite Block in Tamil Nadu was bagged by Dalmia Bharat Refractories while Pahadi Kalan-Gora Kalan Phosphorite Block in Uttar Pradesh was won by Sagar Stone Industries.
It is clearly understood that processing minerals is both cost intensive, polluting and sometimes can be hazardous so India will have to incentivize mineral processing through appropriate tax and royalty regimes. There is a need for public private partnership to ensure that industry adheres to scientifically established standards or environmental safety and minimises hazards and risks in industrial safety.
Under its new critical minerals policy, the government of India is offering incentives to encourage private companies to set up lithium processing facilities. While presenting the latest union budget for the year 2024-25, Finance Minister Nirmala Sitharaman proposed to fully exempt customs duties on 25 critical minerals and reduce BCD (basic customs duty) on two of them. “I propose to fully exempt customs duties on 25 critical minerals and reduce basic customs duty on two of them. This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors,” Sitharaman said.
Granting mining its due importance, a Critical Mineral Mission was announced, supplemented by reduced import duties on important minerals such as lithium to aid setting up of beneficiation plants in the country. The mission also aims to focus on recycling of and overseas acquisition of critical mineral assets. According to Union Mines Minister G Kishan Reddy, “This move is significant for shielding India from elevated levels of import reliance and supply risks owing to the global trends of geo-political turbulence.”
As it competes to secure supplies of minerals critical for energy transition technologies, India is believed to be in talks with Africa and Latin America to secure critical mineral blocks on a government-to-government basis. It is also in the process of applying for licences to explore for deep-sea minerals in the Pacific Ocean. Among the 31 deep-sea exploration licences issued by the UN-backed International Seabed Authority (ISA) two are assigned to India. It plans to begin mining the Clarion-Clipperton Zone, a vast plain between Hawaii and Mexico once the 36-member ISA council negotiates regulations for a mining code.
Additionally India could explore the potential for some minor minerals to be extracted from the waste streams. There are many minor minerals which are used in solar panels which are rarely found in minable quantities as standalone minerals but they can be efficiently extracted in refining and processing of other minerals for example Cadmium can be extracted from Zinc refining, Tellurium from Copper and Gallium from bauxite refining – all of which are identified as critical for the solar industry particularly for thin film solar PV or for defence targeting mechanisms and so on.
Critical mineral mining does come with environmental and social costs, and the task before India is to balance the costs with the essentiality of meeting human needs for energy. Investment in mineral processing in the country will not only give us strategic leverage but economic benefits through value addition to our own resources. A sophisticated refining industry can give India both financial and diplomatic leverage. The time has come for India to consider a strategic mineral stockpile as has been done by some other countries and we have a model in the strategic petroleum reserve. India should become part of supply chain linkages with friendly foreign countries. Looking ahead, mineral security should be a key factor in diplomatic outreaches as India considers joining friendly chains both as supplier and as an importer.
