India-Canada Collaboration on Critical Minerals

• India and Canada have resumed negotiations on a Free Trade Agreement (FTA), with renewed focus on strategic collaboration in the critical minerals sector. This comes at a time when India is actively seeking to diversify its mineral supply chains away from China.

India’s Strategic Opportunities with Canada

• Canada holds reserves of over 31 critical minerals and exported over $50 billion worth in 2023.
• It is recognised globally for ESG-compliant mining practices, offering India a reliable & ethical alternative.

Key Developments

• Diplomatic Reset: Both have agreed to deepen cooperation on mineral security.
• FTA Revival: The agreement could open doors for joint mining ventures, technology transfers, and exploration projects.
• Supply Chain Strategy: Canada joins other partners like Australia, Argentina, Brazil, and Chile in India’s push to diversify mineral sourcing.

Why Critical Minerals Matter to India?

• Mineral Dependency: India’s clean energy and tech sectors EVs, solar panels, electronics rely heavily on critical minerals like lithium, cobalt, nickel, graphite, copper, and rare earths.
• India’s Dependence on China:
  • Lithium: 71% of India’s imports come from China (Canada contributes just 0.13%).
  • Rare Earth Elements: China accounts for 42% of India’s imports (Canada at a negligible 0.02%)
• Strategic Role: These minerals are vital not only for green technologies but also for powering the Fourth Industrial Revolution.
• Projected Demand for Rare Earths in India
  • By 2025: Domestic demand is projected to reach 4,010 metric tonnes, over 50% of which will be driven by EV and wind turbine manufacturing.
  • By 2030: Demand is expected to double to 8,220 metric tonnes, fuelled by growth in clean energy and high-tech industries.
• Transition to Clean Energy: Technologies like EVs, solar panels, and wind turbines require significantly more minerals. E.g., an EV uses six times more minerals than a conventional vehicle.
• Tech-Driven Growth: Emerging sectors such as AI, data centres, robotics, and digital infrastructure are highly mineral-intensive, especially for conductors like copper.
• Geopolitical Importance: Global powers particularly U.S. and China are competing for control of mineral supply chains. China, which dominates rare earth processing, has weaponised this control during trade disputes.

India’s Domestic Potential

• Despite being geologically rich, India’s critical mineral reserves remain largely untapped due to underinvestment in exploration, outdated mining policies, and regulatory delays. Acting now can serve three national goals:
  • Strategic Autonomy: Reducing import dependency improves India’s negotiation power.
  • Atmanirbhar Bharat: A robust mineral base supports self-reliance in battery, electronics, and green tech manufacturing.
  • Economic Competitiveness: Domestic processing & refining can boost jobs & reduce trade deficits.

Key Challenges in Domestic Exploration and Processing

• Inadequate Exploration: Only about 10% of India’s geological potential has been thoroughly surveyed, limiting resource identification.
• Regulatory Hurdles: Delays under the Mines and Minerals Act and complex clearances deter timely project execution.
• Weak Processing Capacity: India lacks robust refining and value-addition facilities, especially for lithium and rare earths.
• Low Private Investment: High risks, policy ambiguity, and limited incentives discourage private and foreign sector participation.
• Heavy Import Reliance: India imports over 70% of lithium and 42% of rare earths from China, posing strategic vulnerabilities.

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Way Forward

• Long-Term Supply Agreements: Finalise long-term offtake agreements with Canada for critical minerals to ensure stable and predictable access to essential resources.
• Invest in Upstream Projects: Acquire investment rights in Canadian mining and processing projects to gain strategic control over supply chains and reduce import vulnerabilities.
• Bilateral Strategic Framework: Establish a dedicated India-Canada institutional mechanism for cooperation across the entire value chain- exploration, mining, refining, and recycling.
• Align with Green Goals: Align the mineral partnership with India’s goals in electric mobility, renewable energy, and electronics manufacturing to support the transition to a green economy.
• Reduce China Dependency: Diversify sourcing and reduce over-reliance on China by building resilient and trusted mineral supply chains with like-minded countries.

Forging a trusted mineral partnership with Canada strengthens India’s path toward strategic autonomy, supports Atmanirbhar Bharat, and powers the Green Tech Revolution. It is key to reducing geo-economic vulnerabilities and securing a sustainable and self-reliant future.

Reference: Financial Express | PMFIAS: Critical Minerals

PMF IAS Pathfinder for Mains – Question 230

Q. What are the key challenges faced by India in the domestic exploration and processing of critical minerals, and how can international collaborations help overcome these constraints? (150 Words) (10 Marks)

Approach

• Introduction: Write briefly about the critical minerals and its application.
• Body: Write key challenges in domestic exploration and processing and international collaborations to overcome these constraints.
• Conclusion: Emphasis on global collaboration to fully leverage critical minerals for green and strategic self-reliance.