Critical Minerals

• India’s critical mineral ecosystem has gained strategic importance as clean-energy demands rise, import dependence exceeds 70%, and China controls nearly 90% of global rare-earth processing, creating economic and geopolitical risks.

What are Critical Minerals?

• A critical mineral is a metallic or non-metallic element crucial for modern technologies, economies, and national security, with the potential risk of disruptions to its supply chains. It includes both primary and processed minerals.
  • A mineral is critical when the risk of supply shortage and associated economic impact is (relatively) higher than that of other raw materials.
• Countries create their own critical minerals list based on strategic needs.
• These are minerals essential to economic development and national security.

Critical Minerals of India

• GoI has unveiled the country’s first report on “Critical Minerals for India” and has identified 30 critical minerals, including nickel, titanium, vanadium, tungsten, etc.
• The identification of the critical minerals is a part of multiple strategic value chains, which include:
  • clean technologies initiatives (such as zero-emission vehicles, wind turbines, and solar panels);
  • information and communication technologies (including semiconductors);
  • advanced manufacturing inputs and materials (such as defence applications, permanent magnets, and ceramics).

Strategic Significance of Critical Minerals

• Economic implications: Integral to the manufacturing sector, especially in the production of EVs, renewable energy systems, and high-tech devices.
• National security and defense: It is essential for defense technologies, including weapon systems, communication equipment, and surveillance.
• Diplomatic Leverage: Fostering partnerships and collaborations with mineral-producing nations. For eg, the India-Australia Critical Minerals Investment Partnership.

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Concerns Associated with Mining of Critical Minerals

• Radioactivity: These six critical minerals are also atomic minerals. So the processing of these minerals may expose workers to radioactivity.
• Nuclear Waste Management: These minerals are used in nuclear applications and they are also corrosion-resistant. So the waste generated after their use in nuclear applications must be safely stored and isolated to prevent any potential environmental or health hazards.
• Environmental Impact: Mining activities of these minerals may disturb natural habitats, affect local ecosystems, and potentially contribute to soil and water pollution.
• Ethical Sourcing: In some regions, mining practices have been associated with social and human rights issues, including unethical labour practices and armed conflicts financed by the illegal trade of minerals.
• High-Temperature Processing Challenges: These minerals are high-temperature resistant. So, they require high-temperature processing which is energy-intensive and complex.
• Health Hazards: Inhaling the gases and fumes released during the mining and processing of these minerals cause different diseases. For e.g., prolonged exposure to beryllium can cause a lung disease called berylliosis.
• Infrastructure gaps: Insufficient infrastructure for mining, processing, and refining critical minerals poses a significant challenge leading to higher costs, delays, and environmental concerns.
• Dependence on imports:
  • India imports 80 percent of its lithium and 85 percent of its cobalt from China.
  • China is the world’s largest producer of 16 critical minerals, responsible for approx 60-70% of global production of cobalt and rare earth elements.
• Recycling and waste management: As per UNEP, less than 1% of the critical minerals used in electronic waste are recycled.

India’s Need to Reform Critical Mineral Royalty

• High Import Dependence: India is entirely reliant on imports for lithium, cobalt, nickel, REEs, and imports 60% of its graphite requirements.
• Low Auction Success: Only 34 out of 81 blocks (42%) auctioned since 2023 attracted bidders due to high royalties and lack of pricing clarity.
• Rising Green-Tech Demand: Demand for EV batteries alone is expected to rise five to six times by 2030, requiring large quantities of graphite, zirconium, and REEs.
• Unviable Mining at Old Rates: A fixed per-tonne royalty made low-grade graphite extraction commercially unviable during price declines.
• China Risk: They process approximately 90% of the world’s REEs, and their export controls disrupted international supply chains.

Bottlenecks in India’s Critical Mineral Ecosystem

• Weak Exploration Capacity: India accounts for <0.9% of global mineral exploration spending, compared to Australia’s ~13% and Canada’s ~15% (CSEP).
• Poor Processing Capability: India contributes only 3% of global refined copper output and processes less than 2% of global REEs, remaining dependent on imports.
• High Capital & Technology Gaps: Private exploration accounts for less than 10% of India’s total mineral exploration expenditure, whereas in mature mining economies, it exceeds 60%.
• Limited Skilled Workforce: India has fewer than 20 geologists per million population, significantly below Australia’s 140+ per million, which hinders deep-mining capabilities.
• Fragmented Policy Ecosystem: Critical mineral auctions have only a 42% success rate, with 34 of 81 blocks securing bidders due to regulatory delays and unclear procedures for pricing.

Way Forward

• Exploration Push: Enhance the National Mineral Exploration Trust (NMET) to support high-risk exploration. E.g., Australia’s “Exploration Incentive Scheme” reimburses drilling costs for private explorers.
• Domestic Processing Capacity: Implement a targeted PLI scheme for processing to decrease import reliance. E.g., China’s state-backed refining clusters process more than 90% of the world’s rare earths.
• Fast-Track Clearances: Establish a unified national portal that consolidates environmental, forest, & concession approvals to reduce delays in auctions. E.g., Canada’s “One-Window” mining clearance system.
• Tech & Skills Partnership: Establish joint R&D and training programmes with leading countries in mineral technology, such as the US–Australia Critical Minerals Partnership for shared processing technologies.
• Strategic Stockpiles: Establish a strategic reserve of essential minerals such as lithium, cobalt, and rare earth elements (REEs) to ensure supply stability during disruptions. For example, Japan’s JOGMEC stockpiles REES to shield against geopolitical shocks.

India’s critical mineral strategy will decide whether it becomes a leader in green technology or remains just a supplier in the supply chain. Enhancing exploration, processing, and international partnerships is vital for long-term mineral security and strategic independence.

Reference: The Indian Express

PMF IAS Pathfinder for Mains – Question 430

Q. India’s growing dependence on China-dominated critical mineral supply chains poses economic and strategic risks. Analyse these risks and suggest a multi-pronged strategy to diversify sources and build domestic capacity. (150 Words) (10 Marks)

Approach

• Introduction: Write a brief introduction about the critical mineral in India.
• Body: Analyse the economic and strategic risks of increasing reliance on China and propose a multi-pronged strategy.
• Conclusion: Emphasise a coordinated approach to diversify sources and enhance domestic capacity.