CRITICAL MINERAL SUPPLY CHAIN – ECONOMY
News: Critical
minerals supply chains: challenges India faces
What's in the news?
● A
recent working paper from Centre for Social and Economic Progress (CSEP)
extends the earlier minerals assessment for 23 minerals by assessing the criticality levels of 43 select minerals
for India based on their economic importance (demand-side factors) and supply
risks (supply-side factors) which are determined through the evaluation of
specific indicators.
Critical Minerals:
● Critical
minerals refer to mineral resources, both primary and processed, which are essential inputs in the production process
of an economy, and whose supplies
are likely to be disrupted due to the risks of non-availability or
unaffordable price spikes.
● To
tackle such supply risks, major global economies periodically evaluate which
minerals are critical for their jurisdiction through a quantitative assessment.
Critical Minerals and India:
● Minerals
such as antimony, cobalt, gallium,
graphite, lithium, nickel, niobium, and strontium are among the 22 assessed to
be critical for India.
● Many
of these are required to meet the manufacturing needs of green technologies, high-tech equipment, aviation, and national
defence.
● However,
while India has a significant mineral geological potential, many minerals are
not readily available domestically.
● Hence,
India needs to develop a national
strategy to ensure resilient critical minerals supply chains, which focuses
on minerals found to be critical in this study.
Challenges faced by India in Critical Mineral Supply
Chain:
India
faces global and domestic challenges in assuring resilient critical minerals
supply chains. On the international front, there currently exist four
significant risks.
1.
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.
2.Russia is one of the significant
producers of nickel, palladium, titanium sponge metal, and the rare earth
element scandium. Ukraine is one of
the major producers of titanium. It also has reserves of lithium, cobalt,
graphite, and rare earth elements, including tantalum, niobium, and beryllium.
The war between the two countries
has implications for these critical mineral supply chains.
3.As
the balance of power shifts across
continents and countries, the critical mineral supply chains may get affected
due to the strategic partnership between China and Russia. As a result,
developed countries have jointly drawn up partnership strategies, including the
Minerals Security Partnership (MSP) and
G7’s Sustainable Critical Minerals Alliance, while developing countries
have missed out.
4.Manufacturing renewable energy technologies
would require increasing quantities of minerals, including copper, manganese,
zinc, and indium. Likewise, the transition to electric vehicles would require
increasing amounts of minerals, including copper, lithium, cobalt, and rare
earth elements.
However,
India does not have many of these mineral reserves, or its requirements may be
higher than the availability, necessitating reliance on foreign partners to
meet domestic needs.
Measures need to be taken:
On
the domestic front, while India has a geological potential similar to
mining-rich Western Australia, much still needs to be explored. India faces
four significant challenges to enable their sustainable extraction.
1.Many critical and strategic minerals
constitute part of the list of atomic minerals in the Mines and Minerals
(Development and Regulation) (MMDR) Act, 1957. However, the present policy
regime reserves these minerals only for public sector undertakings. Some of
these are minerals and ores bearing beryllium, lithium, niobium, titanium,
tantalum, zirconium, beach sand minerals, and rare earth group minerals containing
uranium and thorium.
2.Given
the increasing importance of critical and strategic minerals, there is an
imperative need to create a new list of
such minerals in the MMDR Act. The list may include minerals such as
molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium,
tellurium, selenium, nickel, cobalt, tin, the platinum group of elements, and
fertilizer minerals such as glauconitic, potash, and phosphate (without
uranium). These minerals must be prospected, explored, and mined on priority,
as any delays may hinder India’s emissions reduction and climate change
mitigation timeline.
3.The
reconnaissance and exploration of
minerals must be encouraged, with particular attention given to deep-seated
minerals. This will call for a collective effort by the government, ‘junior’
miners, and major mining companies.
4.An
innovative regime must be devised to
allocate critical mineral mining assets, which adequately incentivises private
explorers, including ‘junior’ explorers. Given the long lead times of setting
up new exploration, extraction, and processing activities, these issues must be
addressed soon if India is to utilize its natural wealth for its manufacturing
needs.
5.India
needs to determine where and how the processing
of minerals and assembly of critical minerals-embedded equipment will occur. Currently,
India relies on global supplies of various processed critical minerals, as
there are limited domestic sources.
6.India
requires a critical minerals strategy
comprising measures aimed at making the country Atma Nirbhar (self-reliant) in critical minerals needed for
sustainable economic growth and green technologies for climate action, national
defence, and affirmative action for protecting the interests of the affected
communities and regions.
7.India
must actively engage in bilateral and
plurilateral arrangements for building assured and resilient critical mineral
supply chains. Furthermore, the assessment of critical minerals for India
needs to be updated every three years to keep pace with changing domestic and
global scenarios.
A
national critical minerals strategy for
India, underpinned by the minerals identified in this study, can help focus
on priority concerns in supply risks, domestic policy regimes, and
sustainability.