New Delhi: In June, two key developments aimed at harnessing India’s critical minerals potential happened that did not make it to the headlines as much as they should have.
First, India joined the Minerals Security Partnership (MSP), a US-led alliance of 14 developed countries. India is now the only developing country to become a part of the MSP, the elite critical minerals club set up in June 2022 to secure critical mineral supply chains.
The second development that took place last week was India coming out with a comprehensive list of 30 critical minerals.
Even as the world is scrambling to secure critical minerals, the two moves, along with a slew of other proposed policy initiatives, could be a shot in the arm for India in ensuring self-reliance and addressing vulnerability in the supply chain of minerals.
India is dependent on China and other countries to meet its requirement of critical minerals including Rare Earth Elements (REE), which are the building blocks of modern day technologies.
From aerospace to defence industry, electronics (mobile phones, laptops) to electric vehicles, solar panels, semiconductors, wind turbines, high-tech industries, telecommunications, security technologies — critical minerals and REE are used in many industries.
They are called critical as their lack of availability or even concentration of existence, extraction or processing in few geographical locations may lead to supply chain vulnerability and disruption, threatening economic development and national security.
Experts have termed India’s induction into the MSP “significant” as this is a group of countries with great technological capacities in geology and mining, mineral processing and metallurgy. India’s inclusion also gives the group, which has had developed countries as members till now, an international balance.
What MSP means for India
It was only last June, at the Prospectors and Developers Association of Canada convention, the largest mining event held in Toronto, Canada, that the US and its key partner countries — Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom, the United States, and the European Commission — announced setting up the Minerals Security Partnership. Italy joined the group in February this year.
According to a media note issued by the US Department of State on 14 June last year, the goal of the MSP is to “ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments”.
The note added that the MSP will help catalyse investment from governments and the private sector for strategic opportunities — across the full value chain — that adhere to the highest environmental, social, and governance standards.
Former Indian foreign secretary Ranjan Mathai, who closely tracks issues related to energy security, told ThePrint, “As the first major developing country to join the group, India gives it greater international balance. It should enhance efforts for supply chain security, particularly because of China’s current dominance over mining, processing, and refining of many key critical minerals.”
China produces 60 per cent of the world’s rare earth elements. It has also become a dominant player in refining and processing critical minerals that it does not produce.
Mathai said the move will, hopefully, encourage India to make better use of its great geological potential. He went a step further and said India needs to go beyond MSP and build critical mineral partnerships with key countries such as Japan, the US and Australia.
India joining the elite critical minerals club was announced in the joint statement during Prime Minister Narendra Modi’s visit to the US last month.
Senior officials in the Ministry of Mines said becoming an MSP member will help India engage with countries using advanced exploration and extraction technologies and learning from their experience. “It will help us prepare our roadmap at a time China has been gradually building up its critical minerals dominance,” said an official who did not wish to be named.
However, MSP is not the only global alliance that India has joined. With the government’s thrust on securing the critical minerals supply chain, India entered into a partnership with Australia in April this year, jointly investing $3 million each in five critical minerals exploration projects in Australia.
Australia produces almost half of the world’s lithium, is the second-largest producer of cobalt and the fourth-largest producer of rare earths elements.
Huge potential, not much work done
Rishabh Jain, Senior Programme Lead, Council on Energy, Environment and Water (CEEW), a policy research institution, also working in the critical minerals sector said that India needs to double down on prospecting and exploration efforts to find critical minerals in India given its huge geological potential.
He said that though more companies are now accredited for exploration in India, the challenge is in finding the minerals immediately because it may take upto a decade to start the mine production.
“Even globally, many of the countries including Congo, Australia, Chile, Argentina end up exporting or historically exported these minerals to countries where processing or raw material manufacturing capabilities exist,” he said.
It is here, Jain says that a global alliance will help. “Being part of the conversation is important,” he said.
Jain said that until now, MSP had all the countries from the global north, which are of the largest demand centres. “As India is the only voice of the global south, it’s a huge opportunity to drive some of these discussions that developing countries face, talking about on the ground challenges and increasing collaboration with developed countries, who have the technology and financial resources.”
An April 2023 working paper ‘Assessing the Criticality of Minerals for India’ released by Centre for Socio and Economic Progress (CSEW), a public policy think tank working in the energy sector said that critical minerals have complex global supply chains with a high concentration in the extracting and processing countries, resulting in high supply risks.
“For example, China produces 60% of the world’s rare earth elements (REEs) and 34% of molybdenum. Around 69% of cobalt is mined in the Democratic Republic of Congo, with China having a majority in processing (65%) of the global mineral supply. Australia produces 52% of the world’s lithium, with China being a major importer and processor of 58% of the global supply. South Africa mines 72% of the world’s platinum output,” the paper states.
Low private sector engagement
One of the problems in India, when it comes to critical minerals, is minuscule private sector participation.
Dr Amit Tripathi, director, MPXG Exploration, a private company which is into mineral exploration and exploration management in Africa and other countries, said the kind of restrictions in place in India are not there anywhere else in the world.
“Outside, the governments do not get into this business,” Tripathi said.
India has one of the world’s largest rare earth resource potentials but they largely remain unproven, he said, adding, “When you do not have raw materials, you cannot develop any downstream manufacturing units. India does not have any raw materials for hard REE and so is not able to manufacture any processed products like rare earth permanent magnets.”
Rare earth permanent magnets are used in all electronic components. They are also used in electric vehicles since strong magnets are needed in the process to manufacture light electronic high-capacity motors.
India still has a long way to go when it comes to exploiting its huge geological potential for critical minerals. That is why getting into alliances like MSP, along with policy initiatives like coming out with a list of critical minerals and finalising a critical mineral policy is so crucial for India’s energy security.
(Edited by Smriti Sinha)
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