China's dominance in critical minerals is affecting global supply chains, driving competition and economic growth in tech sectors. India heavily relies on imports due to limited reserves and technology limitations. To remain competitive, India needs to improve domestic mineral exploration and production capacity, form international collaborations, address information gaps, and involve the private sector.
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Picture Courtesy:The Hindu
China dominance in critical minerals shapes global supply chains, driving competition and economic growth in key tech sectors.
"Critical minerals" are minerals considered essential for modern technology and the economy, but with a high risk of supply chain disruption due to factors like limited geographic sources, geopolitical instability, or complex extraction processes.
They are crucial for national security and the transition to clean energy technologies, particularly in areas like electric vehicles and renewable energy sources like wind turbines; examples include lithium, cobalt, nickel, rare earth elements, and graphite, whose scarcity can significantly impact the production of vital products if their supply is disrupted.
Examples of critical minerals:
China expanded its export control list by adding 28 U.S. entities, limiting their access to various items under dual-use export controls. This includes critical minerals and rare materials crucial for high-tech industries like aerospace, semiconductors, and electronics.
The export restrictions target minerals like tungsten, gallium, magnesium, beryllium, hafnium, and lithium-6 (isotope). These minerals are essential for industries such as chip production and the manufacturing of specialty alloys.
China’s strategy is part of its broader effort to control critical resources and reduce reliance on Western technologies, strengthening its position in global high-tech supply chains while minimizing risks to its own economic stability.
China has previously used similar strategies. For example, it imposed a rare earth minerals embargo on Japan in 2010 and restricted exports of antimony, gallium, and germanium. In December 2023, China also banned rare earth extraction and processing technologies.
India heavily relies on imports for critical minerals, especially lithium, cobalt, and nickel, due to limited domestic reserves, inadequate mining and processing capabilities, and technological limitations.
India's heavy reliance on imports exposes the country to geopolitical risks, and also raises concerns about the sustainability of its industrial growth.
One major challenge is the underdeveloped exploration infrastructure. Although potential mineral-rich zones have been identified, exploration activities are still at an early stage.The Ministry of Mines data shows that only 48% (24 out of 49) of the mineral blocks available for auction in recent years have been auctioned, which highlights a gap in the market's willingness and interest in mineral resources despite the reforms introduced.
The auctioning process has seen limited interest from both domestic and foreign investors. For example, lithium deposits discovered in Jammu and Kashmir’s Reasi district in 2023 initially raised hopes, however, no companies have displayed interest in bidding for these resources, and therefore the block remains unutilized.
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The situation serves as a wake-up call for India to improve its domestic mineral exploration and production capacity. As competition for critical minerals becomes central to global economic diplomacy, India needs to address the challenges to ensure it remains competitive in the future energy transition. |
India is rich in untapped resources, including critical minerals like lithium in Jammu and Kashmir. The reserves could reduce the country’s dependence on imports and support a clean energy transition.
The Mines and Minerals (Development and Regulation) Amendment Act, 2023, has introduced key reforms like exploration licenses and the removal of restrictions on certain minerals. These changes allow for increased private and foreign participation.
Advanced technologies such as AI-driven geological surveys and remote sensing can speed up mineral exploration and extraction.
Fiscal incentives to bridge knowledge gaps between mining companies and the government. With detailed geological surveys, bidders will have the data required to make informed decisions.
A robust critical mineral sector can boost the economy by reducing import dependency. It has the potential to create jobs, promote technological advancements, and promote value-added manufacturing in industries like electronics, renewable energy, and defence.
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India has taken a proactive approach by forming international collaborations, such as partnering with Australia for lithium and rare earth supply. Through partnerships like Khanij Bidesh India Ltd. (KABIL), India aims to diversify its supply chains, reducing dependence on unreliable or hostile sources. |
The international competition for critical minerals is reshaping global economic strategies, with China leveraging its prominence and nations like India still facing structural challenges. India has initiated many reforms however their success depends on addressing information gaps, adequate government incentives and supporting private sector participation. By adopting a proactive investment driven approach, India can transform the critical mineral sector to increase domestic production, reduce imports and ensure sustainable development to achieve the goal of Atmanirbhar Bharat.
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PRACTICE QUESTION Q.Evaluate India’s efforts in building partnerships for critical mineral exploration. 150 words |
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