This June, India came out with its first comprehensive report on critical minerals, where it identified a list of 30 minerals in a focussed strategy to push the country towards “self-reliance” and create an 'Atmanirbhar Bharat.' These minerals include Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.
The Ministry of Mines of India defines critical minerals as those minerals that are essential for economic development and national security. They are essential to all industrialised nations as well as developing countries.
Energy, communications, space and nuclear sectors and a few others are dependent on various critical minerals and rare earth elements. These minerals are predominently used in products ranging from mobile phones, computers, batteries, electric vehicles to green technologies like solar panels and wind turbines.
Based on their individual needs and strategic considerations, different countries create their own lists of critical minerals — the US has a list of 50 minerals, the EU has 34, the UK has 18 minerals, Japan has a set of 31 minerals and Australia has identified 26 minerals. The Indian Economic Survey 2022-23 termed the availability of rare earth elements and critical minerals as the next possible “geopolitical battleground” just as crude oil has been over the last 50 years.
According to the latest IEA World Energy Outlook Special Report, the rapid deployment of clean energy technologies as part of energy transitions implies a significant increase in demand for these minerals. An electric car requires six times the mineral inputs of a traditional car and an onshore wind plant requires nine times more mineral resources than a gas-fired plant. Thus, shift to a clean energy system is set to drive a huge increase in the requirement for these minerals.
As energy transitions accelerate, clean energy technologies are also becoming the fastest growing segment of demand. As per the Indian Economic Survey 2022-23, domestic electric vehicle (EV) market is expected to grow at a CAGR of 49% between 2022 and 2030 and is expected to hit 1 crore annual sales by 2030. Consequently, demand for ACC (advanced chemistry cell) batteries is expected to grow at a CAGR of 50%.
Global Scenario for Sourcing Critical Minerals
While critical minerals are found in large extents across the globe, extracting and refining them is costly, technically difficult and energy intensive. In the current scenario, China dominates the entire value chain accounting for more than half of the world’s production of battery metals including lithium, cobalt, and manganese, and as much as 100% of rare earths.
China controls 72 per cent of the world’s solar modules, 69% of lithium-ion batteries and 45% of wind turbines and produces 63% of the world’s rare earth elements, including 45 per cent of molybdenum. It has also taken a majority stake in the cobalt mines of Democratic Republic of Congo, which in turn produces 70% of the world’s output.
Currently, Australia is the world’s largest producer of lithium. However, more than 99% of value in the lithium battery production is added during chemical processing, cell manufacturing and assembly, which is currently dominated by China.
Internationally, there are genuine security concerns related to the criticality in building more diverse and dependable value chains for critical minerals, about their environmental and social sustainability, and technological challenges.
The complexity of the value chains, high investment overheads for processing and small markets imply that only a handful of businesses or countries participate in the critical minerals market. Recent geopolitical events such as Covid-19 pandemic, Russia-Ukraine war, US-China trade disputes and others have further complicated global supply chains.
India’s Momentous Drive for Sourcing Critical Minerals
India through the “Panchamrit” vision has committed to five broad climate change mitigation strategies in UNFCCC Conference of Parties COP26 in Glasgow, including growing its non-fossil fuel energy capacity to 500 GW by 2030, reducing the carbon intensity of the economy by 45 percent (compared to 2005 level) by 2030, and achieving the target of Net Zero emissions by 2070. Decarbonisation will require critical minerals for India’s transition towards renewable power generation and electric vehicles.
India started its journey for sourcing critical minerals many years back, when an early initiative in this direction came from the Planning Commission of India (now NITI Aayog) in 2011 which highlighted the need for the strategic mineral resources for our industrial growth. It analysed 11 groups of minerals under metallic, non-metallic, precious stones and metals, and strategic minerals.
In 2016, the Department of Science and Technology (DST), in collaboration with the Council on Energy, Environment and Water (CEEW), came out with the Critical Minerals Strategy for India in 2016, which identified 13 minerals that would become most critical by 2030.
Then, in 2019, India set up an expert committee on exploration and sourcing of critical minerals for tie-ups with other countries, specifically for cobalt and lithium sourcing from Australia, Argentina and Bolivia. India also created KABIL (Khanij Bidesh India Limited), a joint venture of three public sector companies, to ensure sourcing of critical and strategic minerals for supply to the domestic market. Finally, in June this year, India released a comprehensive list of 30 critical minerals.
The Geological Survey (GSI) of India has shifted its focus to finding out new resources of critical and deep-seated minerals through advanced exploration techniques. Further, the amendment in the MMDR Act in 2021 allowed accreditation of private exploration agencies and using national Mineral Exploration Trust (NMET) funds for exploration of new deposits through these agencies. India’s first and the only lithium deposit with 5.9 million tonnes of reserve has been discovered in Jammu & Kashmir by the GSI.
The MMDR Amendment Act, 2023 came out in August with focus on critical minerals, where it emphasised on exploration of critical minerals where a private exploration agency can explore the block for grant of mining lease through auction. It is expected to attract junior mining companies having expertise in exploration of specific deep-seated and critical minerals such as REE, gold, lithium, platinum etc.
The Amendment Act also removed six critical minerals from the list of atomic minerals (lithium, beryllium, titanium, niobium, tantalum and zirconium) and placed them with other minerals which shall be auctioned by the Central Government. Thus, it has allowed private sector participation in such critical minerals, which would bring advanced technology, finance and expertise, thereby accelerating exploration and production of critical minerals in the country.
Global Collaboration for Sourcing Critical Minerals
India, due to limited availability of resources and processing facilities of critical minerals within the country, is now collaborating with different countries for smooth operation of the entire critical material value chain from mining, processing to manufacturing activities.
The Resilient Supply Chains Initiative (SCRI) between India, Australia and Japan agreed in September 2020, and more recently, the agreement among the Quad countries to set up a working group on critical materials and technologies is a step in the right direction.
India and Australia have also signed the Critical Minerals Investment Partnership for working towards investment in critical minerals projects to develop supply chains between the two countries. In 2020, India, through KABIL, also signed an agreement with an Argentinian firm to jointly explore lithium.
Australia’s Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU for reliable supply of critical minerals to India. In June, India joined the Minerals Security Partnership (MSP), a US-led alliance of 14 developed countries. Further, India is exploring its mode of association over critical minerals through KABIL with countries like Brazil, DR Congo, Chile, Argentina, Mongolia etc. An MoU has also been signed on the possibility of exploration of lithium in Argentina.
Thus, India has taken the right steps for creating an ecosystem for accelerated exploration and production of critical and new age minerals. It will definitely support India’s vision to become a self-reliant and a developed nation, while leading global efforts on climate change and sustainability.
—The author, Pankaj Satija, is Co-Chair, FICCI Mining Committee. The views expressed are personal.
(Edited by : C H Unnikrishnan)
First Published: Nov 29, 2023 10:15 AM IST
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