India’s Critical Mineral Supply Chains

Institute for Energy Economics and Financial Analysis notes that India’s critical mineral supply chains depend on a few countries, increasing risks during the clean energy transition.

Mineral-wise Distribution

Cobalt Dependence: India imported 751 tonnes worth $10 million in FY25, mainly from Finland (60%), with DR Congo mining 70% globally and China processing 78.6%.
Copper Supply: Imports reached 2.3 million tonnes worth $3.8 billion, led by Tanzania (50%), Chile (24%) and Japan dominating cathodes at 73%.
Graphite Dominance: India imported 60,000 tonnes worth $40 million, while China controls 91% synthetic supply and 90% anode manufacturing capacity.
Lithium Reliance: Imports include 3,000 tonnes worth $35 million, with full dependence, driven by EVs contributing over 90% battery demand.
Nickel Trends: Imports totalled 5,700 tonnes worth $26 million, led by Australia (65%), with prices falling due to the Indonesian surge and geopolitical disruptions.

Key Trends

Dependence: India imports over 80% critical minerals, fully dependent on lithium, cobalt, and nickel.
Rising Imports: Critical mineral imports doubled, reaching $8.01 billion in 2023-24.
Demand Growth: EVs & renewables expansion expected to sharply increase mineral demand by 2030.

Strategic Importance of Critical Minerals

Energy Security: Critical minerals enable renewables; Targets 500 GW non-fossil capacity by 2030.
Industrial Growth: Essential for EVs, batteries; India’s EV market expected to grow rapidly.
Economic Stability: Stable supply chains reduce volatility. E.g., lithium prices fluctuated sharply.
Strategic Resilience: China dominates processing; concentration raises geopolitical supply risks.

Supply Concentration

Chile Supply: Chile is India’s largest supplier, providing 2.8 million tonnes mainly of copper imports.
Key Processors: China, Belgium, Germany & Japan dominate the processing & supply of critical minerals.
Limited Partners: India’s imports are increasingly concentrated among a few major global trade partners.

Critical Supply Chain Risks

Supply Concentration: Critical minerals are sourced from a limited number of countries, increasing vulnerability to shocks.
Export Controls: China impose restrictions on mineral exports, disrupting global supply chains.
Geopolitical Risks: Conflicts such as the Russia–Ukraine war affect availability and global mineral prices.
Price Volatility: Supply disruptions and policy shifts lead to sharp fluctuations in critical mineral prices.
Market Fragmentation: Resource nationalism and friend-shoring strategies are reshaping and dividing global mineral trade networks.

Friend-shoring is the practice of shifting supply chains to politically and economically allied countries to reduce geopolitical and supply risks.

India’s Strategic Mineral Response

Supplier Diversification: India is expanding mineral sourcing from multiple countries like Australia, the USA, the EU, and Japan to reduce dependence risks.
Global Partnerships: Strategic exploration partnerships with Chile, DR Congo, Morocco, and Saudi Arabia ensure long-term resource access.
Domestic Strengthening: Focus on overseas asset acquisition and domestic processing to build self-reliant mineral value chains.
Circular Economy: Emphasis on recycling systems and battery manufacturing to improve sustainability and resource security.

Way Forward

Value Chain: India targets an end-to-end critical mineral chain from mining to EV battery manufacturing under the National Critical Mineral Mission (NCMM).
Tech Transfer: Collaboration with Japan and the USA promotes advanced processing and battery technology access.
Industry Partnership: Agreements with Australia and the EU focus on joint exploration and mineral supply security.
Recycling Push: India aims to recycle 20–25% of battery materials to reduce import dependence.
Strategic Reserves: Planned mineral stockpiles help buffer against global supply shocks & price volatility.

India must secure diversified supply chains for critical minerals to support the energy transition & industrial growth amid global uncertainties & disruptions, as “the future belongs to those who secure their critical resources.”

Reference: Down To Earth | PMFIAS: Critical Minerals

PMF IAS Pathfinder for Mains – Question 661

Q. To what extent does India’s dependence on imported critical minerals constrain its ambitions of becoming a global manufacturing hub? Discuss with reference to key sectors and suggest measures to ensure resource security. (250 Words) (15 Marks)

Approach

Introduction: Write a brief introduction about the critical minerals in India.
Body: Write how India’s dependence on imported critical minerals constrains its ambitions of becoming a global manufacturing hub, mention key challenges, and suggest measures to ensure resource security.