In November 2022, the Ministry of Mines established a seven-member committee headed by Veena Kumari Dermal, joint secretary in the mines ministry. The committee’s objective was to compile a comprehensive list of critical minerals.
On June 28, 2023, Union Minister of Coal, Mines & Parliamentary Affairs Pralhad Joshi unveiled the report prepared by the committee. The report titled “Critical Minerals for India“, has identified the comprehensive list of critical minerals taking into account the requirements of sectors like defence, agriculture, energy, pharmaceutical, telecom etc.
The introduction of the Critical Minerals List signifies a significant achievement in India’s quest for self-sufficiency and resource security. This meticulously curated list aims to identify and prioritize minerals that play a vital role in key industrial sectors including high-tech electronics, telecommunications, transportation, and defense.
Its purpose is to ensure that these essential minerals are readily available to support India’s industrial growth and development.
The list will provide a comprehensive framework to guide policy formulation, strategic planning, and investment decisions within the mining sector. This initiative is in line with India’s broader vision of achieving the ‘Net Zero‘ target, reflecting the government’s commitment to creating a strong and resilient mineral sector.
Currently, the Geological Survey of India (GSI) is primarily dedicated to exploring valuable and deep-seated minerals, aiming to boost the growth of India’s mining sector.
Definition Of Critical Mineral
According to one definition, a mineral is considered critical when there is a greater risk of supply shortage and its resulting impact on the economy compared to other raw materials.
Ideally, the risk of a supply shortage should encompass factors such as import dependence, recycling potential, and substitutability of the mineral.
Challenges in mineral extraction, along with their corresponding social and environmental impacts, have the potential to exacerbate the supply risk in ways that are challenging to quantify.
The European Union (EU) conducted a comparable assessment, classifying critical minerals based on two key factors: supply risk and economic significance.
Australia refers to critical minerals as: “metals, non-metals and minerals that are considered vital for the economic well-being of the world’s major and emerging economies, yet whose supply may be at risk due to geological scarcity, geopolitical issues, trade policy or other factors”.
According to the committee’s report, an ideal definition of Critical Minerals may be stated as follows: –
Critical minerals are those minerals that are essential for economic development and national security, the lack of availability of these minerals or even concentration of existence, extraction or processing of these minerals in a few geographical locations may lead to supply chain vulnerability and disruption.
What Are The Major Uses Of Critical Minerals?
Traditional industries, as well as high-tech sectors, rely on critical minerals. High-tech sectors include clean energy, national defense, information technology, aviation, and space research.Vital products such as mobile phones, computers, batteries, electric vehicles, green technologies like solar panels and wind turbines, energy storage systems for renewable energy and data transmission hardware all depend on these critical minerals.
Critical minerals have specific uses in various sectors:
- Electric vehicles require minerals like cobalt, lanthanum, and lithium.
- Fuel cells need platinum, palladium, and rhodium.
- Wind energy technologies utilize neodymium, dysprosium, and terbium.
- The aviation sector uses titanium extensively.
- Photovoltaic solar technologies require cadmium, indium, and gallium.
How Are The Critical Minerals Categorised?
Critical minerals are categorized into three divisions, each reflecting their primary industrial applications:
- Traditional minerals, including titanium and vanadium
- Sunrise minerals, represented by lithium
- Mixed-use minerals, such as cobalt, nickel, graphite, along with light and heavy rare earth elements (LREEs and HREEs)
There are eight minerals, in particular, that draw significant attention: lithium, cobalt, nickel, graphite, LREEs, HREEs, titanium, and vanadium.
Rare Earth Elements
The Rare Earth Elements (REEs) constitute a group of 17 metallic elements, inclusive of the 15 lanthanides found on the periodic table, in addition to scandium and yttrium. These REEs are integral to the composition of over 200 different products, spanning a broad gamut of applications.
They are particularly essential for high-tech consumer goods, including cell phones, computer hard drives, electric and hybrid vehicles, and digital displays such as flat-screen monitors and televisions.
Not only are REEs essential for high-tech goods, they also have extraordinary characteristics that make them especially useful in many industries. For instance, REEs display unique magnetic and luminescent properties that allow them to be used in military equipment, such as radar systems and night vision goggles.
They, they have been indispensable for medical treatments involving MRI scanners and other imaging applications.
Determining The Criticality of Minerals
The criticality of raw materials or critical minerals varies from one country to another, influenced by several factors such as their stage of economic development, industrial needs, national interests, security concerns, technological advancements, market fluctuations, and availability of natural resources.
Although the methods for assessing criticality may differ across various studies, they all fundamentally rely on the same logic. The majority of nations evaluate criticality based on two key factors: economic importance and supply risk. In the Indian context as well, the committee considered the same two parameters.
- The concept of Economic Importance (EI) delves into the distribution of raw materials across various industrial uses. It quantifies the effect on the concerned sector if these minerals were to become scarce or completely vanish from the supply chain.
- Supply Risk (SR) assesses the concentration of global production of primary raw materials and their sourcing at a national level. This measure considers the governance of supplying nations, environmental factors, the role of recycling in providing secondary raw materials, the potential for substitution, import reliance, and restrictions on trade in other countries.
Three-Step Methodology For Identifying Critical Minerals
The Committee has put forth a comprehensive three-step methodology to identify critical minerals:
- The first step consisted of an extensive analysis of the critical mineral strategies of several nations, including Australia, the USA, Canada, the UK, Japan, and South Korea.
- Following this, the second step involved an inter-ministerial consultation, where different ministries identified which minerals were critical to their respective sectors. Inputs were gathered from the ministries of power, new and renewable energy, along with departments of atomic energy, fertilizers, science and technology, pharmaceuticals, and NITI Aayog – the government’s advisory body.
- The final step of the process entailed the development of an empirical formula, which is used for the evaluation of mineral criticality.
30 Critical Minerals Identified By The Committee
The Committee’s thorough three-step methodology has resulted in the identification of 30 minerals as critical for India.
Of these, two key minerals hold high significance in the fertilizer sector. The critical minerals were determined through an extensive process incorporating international strategies, inter-ministerial inputs, and the application of a proprietary empirical formula.
The inclusion of fertilizers on India’s critical minerals list is of strategic importance. As one of the world’s major exporters of rice and wheat, India requires robust support for its agrarian sector to sustain its large population. Ensuring a regular supply of fertilizers is therefore crucial for India’s agricultural productivity and food security.
Why Does India Need A Critical Mineral List?
India’s reliance on imports for most critical minerals, barring a few like copper, gallium (found during alumina production), graphite, cadmium (identified amidst zinc smelting and refining), phosphorus, potash, and titanium, is nearly absolute.
There exists immense untapped potential in India concerning these critical minerals, with current exploration estimated at a mere 10-20 percent of the real potential.
Critical minerals underpin a multitude of modern technologies. From smartphones and electric vehicles to solar panels, semiconductors, and wind turbines, the utility of minerals such as lithium, graphite, cobalt, thalium, and rare earth elements is extensive. Their importance extends to high-tech electronics, telecommunication, transportation, and even defense.
For India, formulating a critical mineral list is an exercise in pinpointing areas that demand prioritisation. It guides the allocation of efforts and resources to guarantee a seamless supply chain.
Creating a comprehensive list of critical minerals will bring several advantages to India.
Addressing Supply Chain Disruptions
The goal of identifying critical minerals is to minimize the risk of disruptions that could negatively impact industries and sectors that depend on these minerals. By securing a stable and dependable supply, proactive measures can be implemented to ensure their consistent availability, thereby facilitating the seamless functioning of the supply chain.
India’s pursuit of self-reliance is driving the demand for critical minerals, fueled by government initiatives like Make in India, Smart City, Atmanirbhar Bharat, the 100 GW target for renewable energy, and the Production Linked Incentive (PLI) schemes. These initiatives place a strong emphasis on promoting domestic manufacturing, encouraging the adoption of renewable energy, and fostering the expansion of the consumer electronics sector.
Consequently, there is a projected surge in the demand for critical minerals, which play a vital role in accomplishing these objectives. The identification of these minerals aligns perfectly with India’s self-reliance roadmap, ensuring a strong foundation for sustainable progress.
Providing A Framework For Policy Formulation
The list of critical minerals serves as a comprehensive framework that directs policy, strategy, and investment decisions. This guidance facilitates informed decision-making for policymakers and stakeholders by offering insights into resource allocation and development priorities.
This approach maximises the efficient use of critical minerals, aligns seamlessly with national objectives, and fosters a sustainable and robust mineral sector.
Promoting Cleaner Technologies
As India aims to achieve self-reliance in developing emerging technologies within the clean energy sector, the scaling up of manufacturing operations for crucial components like solar panels, wind turbines, and electric vehicle (EV) batteries becomes imperative.
This expansion will generate significant demand for a diverse range of minerals, driving the growth of the industry. India’s dependence on the supply of these minerals is projected to continue in the foreseeable future.
With an ambitious goal to achieve net-zero greenhouse gas (GHG) emissions by 2070, the country is committed to sustainable development and environmental stewardship.
Moreover, recognizing India’s position as a significant exporter of wheat and rice, the incorporation of fertilizers into the critical minerals list is an acknowledgment of its importance.
Five Core Objectives
The Indian Critical Minerals Identification process tries to address five core objectives:
Challenges And Vulnerabilities In Critical Mineral Supply Chains
Critical minerals, which are indispensable to mainline technologies, are susceptible to significant disruptions within their supply networks. Their critical nature stems from their scarce availability in certain regions which, in turn, leads to a heightened dependency on them across multiple sectors.
The vulnerability of these supply networks presents substantial risks to a nation’s economic growth and national security. This is due to the crucial role these minerals play in numerous industries, manufacturing processes, and military infrastructure.
Numerous factors, such as emerging markets, social turmoil, political maneuvers, mining incidents, natural disasters, mineral scarcity, conflicts, and global health emergencies, all contribute to the risk factors linked to the supply networks of these essential minerals.
China’s Mineral Monopoly
China has been actively acquiring mining rights to important minerals needed for energy transition over the past two decades. They’ve also developed the skill to process these minerals from their raw state into usable metals.
China plays a vital role in the global supply chain for key minerals. The International Energy Agency reports that China refines approximately 50-70% of the world’s lithium and cobalt, 35% of nickel, a staggering 95% of manganese, and nearly 90% of rare earth elements.
These elements are essential for the production of wind turbines and electric vehicle (EV) motors. Remarkably, China is responsible for the entire processing of graphite, a crucial component in EV batteries. This dominance underscores China’s significance in shaping the future of renewable energy and sustainable transportation.
But China’s influence doesn’t stop at refining minerals. They are also a huge player in making batteries. China’s CATL is the world’s largest maker of lithium-ion batteries, owning a 35% share of the global market.
Another Chinese company, BYD, recently surpassed LG to become the second-largest, holding a 16% share. Half of the top 10 battery manufacturers are from China, giving the country a 75% share of the rechargeable battery market worldwide.
This dominance over critical minerals and battery production is problematic for countries like India, which have set ambitious renewable energy goals.
India aims to boost the share of renewables in its energy grid to 500 GW by 2030 and wants a significant percentage of its vehicles to be electric by the same year. So, China’s control over these vital resources could hinder other countries’ energy transition plans.
Global Lithium-ion Capacity
Predictions show a substantial increase in global lithium-ion capacity, from 1,000 GWh in 2021 to a projected 5,500 GWh in 2030. This implies a demand for 5,500,000 tonnes of lithium, whereas the global production was only 84,000 tonnes in 2021.
Insufficient Indigenous Supply
Simply securing critical mineral supplies isn’t enough to protect India from supply risks. There is a potential concern that the country’s reliance on Chinese supply chains may persist if Chinese electric vehicle (EV) companies replicate their achievements in the solar panel industry.
Similarly, if Indian firms persist in sourcing components from China instead of purchasing from domestic manufacturers, the issue of dependency on Chinese suppliers could endure.
Government Of India Initiatives And International Partnerships
India Enters MSP
In June 2023, India achieved a significant milestone by joining the Mineral Security Partnership (MSP), led by the United States. This announcement was made through a joint statement by US President Joe Biden and Indian Prime Minister Narendra Modi, during the latter’s visit to the US.
The Minerals Security Partnership (MSP) is a global coalition spearheaded by the United States, dedicated to ensuring a reliable and steady provision of essential raw materials for participating economies. With a specific focus on energy minerals vital for clean energy technologies, the MSP strives to establish resilient supply chains that can meet the demands of the future.
The goal of the MSP is to optimise economic advantages by harnessing geological resources. It fosters the production, processing, and recycling of vital minerals while promoting collaboration and mutual development among member nations.
By facilitating mineral exchanges and the sharing of production-related technologies, the MSP encourages cooperation within the mineral sector.
The MSP has a particular emphasis on examining mineral supply chains, with a specific focus on minerals like cobalt, nickel, lithium, and the 17 rare earth minerals. These minerals hold immense importance across various industries.
The MSP includes Australia, Canada, Finland, France, Germany, India, Italy, Japan, South Korea, Sweden, the United Kingdom, the United States, and the European Commission.
India’s membership in the MSP offers it substantial benefits, especially in light of its aggressive goals for electric mobility, electronics manufacturing, and semiconductor industries.
As India propels toward a major shift in its public and private transportation to electric vehicles (EVs), it’s vital to have a guaranteed supply of crucial minerals for EV batteries. The MSP furnishes India with a platform to secure these indispensable minerals, bolstering its transition to clean energy.
India’s aspiration to develop its electronics manufacturing and semiconductor industries requires access to cutting-edge technologies for mineral exploration and extraction. Being part of the MSP allows India to join forces with nations proficient in these domains, facilitating the exchange of knowledge and the adoption of state-of-the-art techniques.
Establishment Of Khanij Bidesh India Ltd. (KABIL)
In 2019, India took a significant step by creating Khanij Bidesh India Ltd. (KABIL), a joint venture involving three public sector undertakings: the National Aluminum Company, Hindustan Copper, and a mineral exploration company. KABIL aims to secure critical minerals crucial for India’s industrial needs.
To achieve this objective, India has forged an agreement with an Argentine firm to explore and prospect for lithium. Additionally, the government is looking at potential exploration opportunities in Chile and Bolivia.
In 2019, India marked a significant milestone with the formation of Khanij Bidesh India Ltd. (KABIL). This joint venture is comprised of three public sector entities: the National Aluminum Company, Hindustan Copper, and a mineral exploration company.
KABIL’s mission is to procure critical minerals vital for India’s industrial requirements. In pursuit of this goal, KABIL has entered into an agreement with a firm from Argentina for lithium exploration and prospecting. Additionally, the government is currently assessing potential exploration initiatives in Chile and Bolivia.
India-Australia Critical Minerals Investment Partnership
The governments of India and Australia have embarked on a strategic alliance to safeguard the supply chain of crucial minerals. Each nation has pledged a joint investment of US$3 million into five exploratory ventures based in Australia. The primary objective of this partnership is to optimize exploration and mining processes, ensuring a steady supply of critical minerals to meet India’s growing industrial demands.
This collaboration specifically focuses on supporting India’s production of Electric Vehicles (EVs), as well as bolstering its defense and space sectors. By harnessing Australia’s abundant mineral reserves and leveraging cutting-edge mining technologies, this partnership aims to enhance India’s access to vital minerals required by its key industries.