Critical Minerals List in India

India announced a Critical Minerals Mission in the Budget 2024-25, aiming to enhance domestic production and recycling of critical minerals such as copper and lithium. These minerals are vital for sectors like defence, agriculture, energy, pharmaceuticals, and telecom but face supply chain vulnerabilities due to limited availability and geographic concentration. To address this, India is focusing on securing a stable supply of these strategic resources.

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CRITICAL MINERALS LIST IN INDIA

Critical minerals are crucial for economic development and national security, especially in defence, aerospace, nuclear, and space sectors. However, their supply chains are vulnerable due to limited availability and the concentration of extraction and processing in a few geographic locations.

IMPORTANCE OF CRITICAL MINERALS FOR INDIA

• Boost to India's Economic Development: These minerals boost India's economic growth by supporting key industries like high-tech electronics, telecommunications, transport, and defence. Their availability drives job creation, income generation, and innovation, with initiatives like India's semiconductor manufacturing push relying heavily on these resources.

• Energy transition to Net-zero Emissions: These minerals are essential for modern technologies like solar panels, wind turbines, and advanced batteries, supporting India's energy transition and its goal of net-zero emissions by 2070.

• Competitive Value chain setup in India: Discovering critical minerals and identifying their use in advanced technologies will help establish a competitive value chain in India, attracting foreign direct investment from countries like the UK and USA under their China+1 strategy.

• National Security: These minerals are crucial for defence, aerospace, nuclear, and space applications, enabling the development of materials that withstand extreme conditions and perform complex functions, thereby strengthening India's national security.

• Lowering India’s import Bill: Most critical minerals in India are currently imported. Increasing domestic exploration and production will help reduce India's import burden and current account deficit.

CONCERNS WITH CRITICAL MINERALS

• Geopolitical and oligopolistic Monopoly: The concentration of critical minerals in a few countries creates geopolitical monopolies and oligopolistic markets. For example, Australia controls 55% of lithium reserves, while China holds 60% of rare earths.

• Dominance of China in the processing and refining sector: China dominates global critical mineral supply chains, accounting for 60% of production and 85% of processing capacity, giving it significant political leverage.

• Geopolitical Threats: The geographic concentration of critical minerals makes them vulnerable to geopolitical risks. Conflicts, trade disputes, or policy changes in these regions can disrupt supply. For example, the civil war in the Democratic Republic of Congo, which holds 70% of the world’s cobalt reserves, has affected global cobalt supply.

• Resource Nationalism: The geographic concentration of these minerals has led to resource conflicts, increased resource nationalism, and trade fragmentation, such as the rising resource nationalism in Africa.

• Price Volatility: Unlike oil, most critical materials are not widely traded, limiting hedging opportunities against price volatility. Additionally, insufficient data on consumption, production, and trade creates uncertainty and delays investments.

• Rising Import Bill: From FY22 to FY23, critical mineral imports rose by 34% to nearly Rs. 91,000 crore. India's heavy reliance on these imports threatens its industrial and energy security.

• Environmental Issues: Mining critical minerals can cause biodiversity loss, land use changes, water depletion, pollution, and waste contamination. For example, lithium mining in the Chilean Atacama desert is highly water-intensive.

• Long Gestation Period for Alternatives: Developing alternative sources and processing capabilities for critical minerals, such as India’s plans with Australia, may take over 15 years, delaying self-reliance.

FACTORS AFFECTING CRITICALITY

THE GOVERNMENT OF INDIA IDENTIFIED 30 CRITICAL MINERALS LIST IN JULY 2023.

GOVT INITIATIVES FOR CRITICAL MINERALS IN INDIA

• Amendment to Mines and Minerals (Development and Regulation) Act, 1957: Empowers the Central Government to auction blocks of 30 critical minerals and allows private sector entry through auctions.

• FDI Liberalisation: Since 2019, 100% foreign direct investment is permitted in mining, with a reclassification of some minerals to facilitate private-sector involvement.

• International Collaboration: India joined the US-led Mineral Security Partnership, is assisting Argentina in lithium exploration, and is discussing lithium and cobalt projects in Australia.

• Institutional Initiatives: The Geological Survey of India has over 250 projects for deep-seated critical minerals and startup challenges for advanced processing technologies.

• Customs Duty Removal: Duties on 25 critical minerals, including lithium and cobalt, have been removed to support domestic manufacturing of technologies like EVs.

• Concessional Customs Duty Extension: Extended 5% concessional customs duty on lithium-ion cells until March 2026.

• Critical Mineral Mission: Announced in Budget 2024 to boost India’s critical minerals sector.

SIGNIFICANCE OF CRITICAL MINERAL MISSION

• Boost domestic production and recycling of critical minerals by enhancing refining and processing capacities.
• Identify critical minerals to plan for their acquisition and preservation based on long-term needs.
• Reduce import dependency, particularly for elements currently fully imported.
• Accelerate exploration, overseas acquisition, resource efficiency, recycling, and R&D for substitutes.

WAY FORWARD

• Centre of Excellence for Critical Minerals (CECM): Establish a dedicated wing in the Ministry of Mines, similar to CSIRO, to collaborate with international agencies and KABIL for strategic mineral acquisitions.

• Expand Mineral Security Partnership (MSP): Include more Global South countries, especially African nations rich in critical minerals, to create an international platform for reporting on critical mineral markets.

• Encourage FDI in Domestic Mining: Attract foreign direct investment to support battery and EV manufacturing and bring in international expertise for exploring critical minerals.

• Invest in Beneficiation and Processing: Develop beneficiation and processing facilities in Africa to support local economies and sustainable partnerships.

• Path to Global Leadership: Emulate Indonesia’s success in nickel to lead globally in critical minerals by leveraging both domestic and international resources.

• Align Mineral Incentives: Ensure the production-linked incentive scheme for minerals supports global goals and creates employment opportunities.