09 August 2024 – The Indian Express

What are Critical Minerals

• Regarding critical minerals, the Indian government has taken two significant actions in 2023. The first was to identify in July 2023 a list of thirty critical minerals (excluding rare earths, which are easily identified in the periodic table); the second was to amend the mining laws in November 2023 to permit the private sector to bid on twenty blocks of rare earths and critical minerals.

Amendment Act of 2023 for Mines and Minerals (Development and Regulation):

• Concessions are auctioned off by state governments under the original Act, with a few exceptions.
• The federal government will hold an auction for composite licences and mining leases for specific important and strategic minerals, according to the revised Act, 2023.
• Lithium, cobalt, nickel, phosphate, potash, tin, and phosphate are some of these minerals. But the state government will nonetheless make accommodations.

Rare Earth Elements (REEs):

• The 17 chemical elements that make up the group known as rare earth elements (REEs) are the 15 lanthanides, scandium, and yttrium. Even though the elements are rather common in the Earth’s crust, rare earth elements are rarely found in quantities that may be profitably extracted, despite their name.
• Due to their special qualities, rare earth elements (REEs) are essential parts of many contemporary technology, such as wind turbines, electric cars, cellphones, and defensive systems. Their unique qualities make them indispensable in various applications such as magnets, catalysts, and phosphors.

Critical Minerals: What Are They?

• Critical minerals are those that are necessary for both national security and economic growth. Their scarcity or the concentration of their extraction or processing in a small number of geographic areas can create supply chain vulnerabilities or even cause supply disruptions.
• There is no set definition for critical minerals; instead, nations define what constitutes a critical mineral based on their own standards.

• It’s a dynamic process that might change when new technology, market conditions, and geopolitical factors come into play.
• Various nations may have distinct lists of essential minerals according to their own objectives and special conditions.
• Due to their significance for either economic growth or national security, the US has designated 50 minerals as critical.
• Thirteen minerals have been designated by Japan as essential to their economy.
• Eighteen minerals are vital to the UK, 34 to the EU, and 31 to Canada.

• Critical minerals have been designated by India based on factors such as their potential for disruption, substitutability, cross-cutting usage across many sectors, dependency on imports, recycling rates, etc.

 Thirty essential minerals for India have been determined by an expert committee under the Ministry of Mines:

• These include Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium, and Cadmium. Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, and REE are also included.

• These 30 designated important minerals are found in the states and union territories of Bihar, Gujarat, Jharkhand, Odisha, Tamil Nadu, Uttar Pradesh, Chhattisgarh, and Jammu & Kashmir.
• The Committee also recommends the Ministry of Mines establish a Centre of Excellence for Critical Minerals (CECM). The list of essential minerals for India will be updated on a regular basis by CECM, which will also occasionally declare the key mineral strategy.

 What is the Global Situation for Critical Minerals Right Now?

• The energy sector was the main driver of the threefold growth in lithium demand, 70% increase in cobalt demand, and 40% increase in nickel demand between 2017 and 2022.
• According to estimates from the International Energy Agency (IEA), over 40% of the total demand for critical minerals over the next 20 years would come from clean energy technologies for copper and rare earths, 60–70% from nickel and cobalt, and 90% from lithium. This is in order to meet the targets set forth in the Paris Agreement.
• To reach the climate targets by 2040, the mineral demand for clean energy technologies would generally increase by a factor of at least four.

• The pricing and speed of energy transitions will be significantly impacted by the availability of essential mineral supply. Countries are putting new rules into place to diversify their mineral supplies in an effort to reduce uncertainty in global supply chains.
• The export of unprocessed mineral ores has been restricted by resource-rich countries including Zimbabwe, Namibia, and Indonesia, while the US, Canada, the EU, and Australia have passed regulatory laws.

• These resources are concentrated in a small number of nations; for example, the top three producers in the world control more than three-quarters of the world’s output of rare earths, cobalt, and lithium.
• Particularly, the Democratic Republic of the Congo (DRC) has 75% of cobalt reserves, Indonesia has 35% of nickel reserves, Chile has 30% of copper reserves, Australia has 55% of lithium reserves, China has 60% of rare earth reserves, and so on.

• Addressing these issues is crucial since international relations have become more divisive, particularly in light of recent events like the trade war between the US and China and the conflict between Russia and Ukraine. Sanctions and changes to existing trade patterns have resulted from these conflicts.

• Due to rising demand outpacing supply, important industrial metal prices, including copper, are predicted to rise in the upcoming years. The cost of producing gadgets like solar panels and electric cars would probably be affected by this increase in material prices.

What Does Critical Mineral Significance Mean?

• There have been previous attempts in India to determine which minerals are essential to the nation, such as a 2011 initiative by the Planning Commission of India that emphasised the importance of the essential minerals.
• Eleven mineral classes were examined in the research, which was divided into many categories: metallic, nonmetallic, precious metals and stones, and strategic minerals. A significant amount of attention was given to the investigation and development of rare earth elements in the nation between 2017 and 2020.

• These minerals are essential to many sectors of the economy, including defence, telecommunications, transportation, and high-tech electronics. Furthermore, green technology like solar panels, wind turbines, batteries, and electric cars depend on vital minerals.
• Not only do critical minerals contribute significantly to decarbonisation, but they also play other roles. In addition, they are needed for consumer electronics, transportation, industry, defence, fertilisers, and construction magnets.
• These sectors have the potential to create jobs, generate money, and foster innovation in India given the country’s high domestic demand.

• These minerals are essential for usage in space, defence, aerospace, and nuclear applications, which calls for the employment of dependable, high-quality materials that can survive harsh environments and carry out intricate tasks.
• India needs to guarantee self-sufficiency and defence readiness by guaranteeing a consistent supply of vital minerals.

• Given India’s ambitious goals to reach net-zero by 2070, the supply of essential minerals, including rare earths, is critical. India aims to establish 500 GW of non-fossil fuel power generation capacity by 2030.
• Additionally, it wants 80% of two- and three-wheelers, 70% of commercial vehicles, and 30% of private cars to be electric. Without a reliable supply of lithium and other minerals needed to make batteries, none of this would be feasible.

• The identification of these minerals is important for robust supply-chain networks and industrial production because they are part of several strategic value chains, including clean technologies initiatives like semiconductors, wind turbines, and solar panels; information and communication technologies; and advanced manufacturing inputs and materials like ceramics, permanent magnets, and defence applications.

• Through these partnerships, India may increase the security and resilience of its mineral resources, diversify its import sources, and lessen its reliance on China. As a result, the US-led Minerals Security Partnership (MSP) was established.
• India is a member of the MSP as well. Strengthening the vital minerals supply chain is the MSP’s goal. The MSP include nations with critical mineral reserves, such as Australia, Canada, Sweden, and Norway, as well as nations with processing technology access, such as South Korea and Japan.

 What are the many issues that India has with critical minerals?

• Critical minerals like lithium, cobalt, and other rare earth elements are scarce in India. Since the majority of these minerals are imported, India is largely dependent on other nations for their supply.
• Due to supply disruptions, geopolitical events, and price volatility, this reliance on imports may make the country vulnerable. Critical minerals are heavily imported into India; 93% of copper and 100% of nickel and lithium are imported.

• Minerals including copper, manganese, zinc, lithium, cobalt, and rare earth elements are needed in greater amounts for the production of renewable energy technology and the switch to electric vehicles.
• It is important to note that the construction of solar PV plants, wind farms, and electric vehicles necessitates a higher mineral requirement than that of fossil fuels.
• An on-shore wind farm needs nine times more mineral resources than a gas-fired plant, and an electric automobile takes six times the mineral input of a conventional car.

• It is important to note that the MSP excludes nations that are rich in key essential minerals, such as Chile, the Democratic Republic of the Congo, Indonesia, and others, raising questions about its efficacy. “Friend shoring,” or shifting production from authoritarian and hostile regimes to friends, is the fundamental tenet of MSP.

• Significant Part of Rare Earth Reserves: China not only possesses a significant portion of rare earth reserves, but it also has total control over how these materials are processed. About 90% of rare earths, 50–70% of lithium and cobalt, and 35% of nickel produced worldwide are processed in China.
• Chinese businesses have invested in Australia, Chile, Indonesia, and the Democratic Republic of the Congo (DRC) to obtain the minerals that these countries lack adequate supplies of.
• China has established a monopoly in the production of finished goods, accounting for 78% of cathodes, 85% of anodes, 70% of battery cells, and 95% of permanent magnets built of rare earth elements.
• Resolving Political Scores Against Nations: China, incidentally, has been resolving political scores with nations such as the US and Japan by limiting their exports and the accompanying technologies. This is done by exploiting its monopoly position on rare earths.
• The world community has undoubtedly been alarmed by China’s readiness to arm-twist other nations and its dominant position in the market for vital resources.

• Australia and India have inked a deal to collaboratively search Australia for lithium and cobalt resources. The insufficient availability of minerals is the issue. Processing it and producing the finished product requires access to technology.
• A gestation period of at least 15 years is thought to exist. There is significant concern that India’s efforts to decarbonise could be hampered by a lack of access to vital minerals.

• It is imperative to address the resource component. Evaluating the accessibility and availability of essential materials needed for renewable energy systems is essential. This entails assessing the country’s reserves of vital minerals and looking for ways to source them from a variety of foreign markets or extract them sustainably.
• In order to reduce the risks associated with potential disruptions in international supply chains, policies should also be in place to guarantee a consistent supply of these resources.

• Making the switch to renewable energy frequently requires large expenditures in R&D, legislative backing, and infrastructure development. Financing strategies, incentives, and procedures that may draw in both public and private investment are required.
• Finding opportunities for cross-border cooperation and investigating creative funding methods will also be essential to raising the funds needed for an energy transition that works.

• Reaching our energy targets requires the use of technology. The global community must concentrate on developing indigenous technological capacity, advancing research and development, and encouraging innovation in clean energy technology.
• Technology transfer, partnerships with academia and business, and the establishment of an ecosystem that fosters the creation, uptake, and expansion of creative clean energy solutions are all necessary.

• The Ministry of Mines’ expert committee recommended the creation of a National Institute or Centre of Excellence on critical minerals, modelled after Australia’s CSIRO, the biggest organisation dedicated to minerals research and development worldwide.
• It is suggested that a Centre of Excellence for Critical Minerals be formed inside the Ministry of Mines, with the added responsibility of updating India’s list of critical minerals on a regular basis and informing the critical mineral policy on occasion.

 What Recent Measures Has India Done to Encourage Production?

• The panel examined the tactics of several nations, including Australia, the United States, Canada, the United Kingdom, Japan, and South Korea, in the first step of its three-part review to determine the minerals crucial to India.
• An interministerial consultation was conducted with several ministries during the second stage of assessment in order to identify minerals that are essential to their respective industries.
• The objective of the third stage evaluation was to develop an empirical formula for assessing the criticality of minerals while keeping in mind the EU approach, which takes into account two main factors: supply risk and economic importance.

• During Field Seasons 2020–21 and 2021–22, the GSI, an associated office of the Ministry of Mines, conducted a G3 stage mineral exploration in the Salal–Haimna areas of the Reasi district, Jammu & Kashmir, and assessed an inferred resource of 5.9 million tonnes of lithium ore.
• Further exploration operations on diverse mineral commodities, including lithium, would be undertaken in the future in different parts of the country, including Jammu & Kashmir, based on the mapping outcome.

• To guarantee supply side certainty, it is necessary to locate and purchase key and strategic foreign mineral assets like cobalt, lithium, and others.
• Through the Ministry of External Affairs and the Indian Embassies in nations like Argentina and Australia, KABIL has started corresponding with a number of state-owned organisations of the shortlisted source countries in order to acquire mineral assets, such as rare earth elements, lithium, and cobalt.

• In order to ensure a consistent supply of these vital resources, the government’s recent steps addressing important minerals represent a substantial step forward. A proactive approach to managing possible shortages is demonstrated by the designation of 30 essential minerals and the revision of mining rules to permit private sector participation. There are obstacles, though, like the concentration of resources in a small number of nations and China’s hegemonic status in processing and manufacturing. Overcoming these obstacles and guaranteeing a sustainable supply of essential minerals are vital to the decarbonisation process and the achievement of net-zero targets by 2070.