Critical Minerals Import Dependency of India

Why in News?

India to kick off critical minerals mission to bolster energy transition, EV manufacturing.

What are critical minerals?

• Critical minerals – These are  both primary and processed minerals  which are essential inputs in the production process of an economy, and whose supplies are likely to be disrupted due to the risks of non-availability or unaffordable price spikes.

• 30 Critical minerals - The Ministry of Mines in 2023 identified 30 critical minerals deemed essential for the nation’s economic development and national security.

What is the mineral dominance  of China?

• China’s mineral wealth - The world’s largest mining nation, China has discovered 173 types of minerals, including 13 energy minerals, 59 metallic minerals, and 95 non-metallic minerals.

• China’s investment - Supported by an exploration investment of $19.4 billion, the reserves of nearly 40% of these minerals,  have increased significantly last year.
• China’s mineral value chain – It has invested strategically across the mineral value chain production.
• China has dominance in processing and refining, with control over 87% of rare earth processing, 58% of lithium refining, and 68% of silicon processing.
• Global investments - China has strategically invested in overseas mining projects and built unparalleled midstream refining capabilities.
• Weaponisation of  critical mineral exports - Beijing primarily targets minerals deemed critical by Western nations and their allies, especially those essential for semiconductors, batteries, and high-tech manufacturing.

Why does India rely on imports?

• India’s import dependence – India is acutely vulnerable to Chinese supplies, particularly for six critical minerals where dependency exceeds 40 %.

• Inaccessible reserves - Many critical minerals are deep-seated, requiring high-risk investments in exploration and mining technologies.
• Structural challenges – India lacks adequate institutional mechanisms and infrastructures capacity to extract critical minerals.
• Lack of technological capacity – Despite the presence of 5.9 million tonnes of lithium deposits in Jammu and Kashmir, India lacks the technological capability to extract lithium from such geological formations.
• Lack of private sector participation – High-risk investments in exploration, absence of adequate incentives and policy support has deterred private sector participation.

What measures has India taken to reduce the dependency?

• India has initiated a multi-pronged approach to reduce its dependency on China.
• Establishment of  KABIL – It is a joint venture of three State-owned companies, to ensure supply side assurance of critical and strategic minerals and mineral security of the nation.

Khanij Bidesh India Limited (KABIL), is a Joint Venture of National Aluminium Company Ltd. (NALCO), Hindustan Copper Limited (HCL) and Mineral Exploration & Consultancy Limited (MECL) .

• Strategic partnerships - India has joined Minerals Security Partnership and the Critical Raw Materials Club to diversify its supply sources and strengthen partnerships.
• National Critical Minerals Mission – It was launched as part of Budget 2024-25, aimed at reinforcing India’s Critical Mineral value chain across all stages – from exploration and mining to processing, and recovery from end-of-life products.
• Research investment – India is investing in research through institutions like the Geological Survey of India and the Council for Scientific and Industrial Research.
• Mineral recycling -  India has been promoting recycling and circular economy practices to reduce virgin mineral dependency.
• PLI Incentives - Mines Ministry has proposed production linked incentive (PLI) scheme to encourage e‐waste recycling, incentivize the production of recycled critical minerals and promote investments in advanced recycling technologies.

What India can do?

• Transitioning away from China will require sustained investment and long-term commitment.
• Financial and administrative support to accelerate the development of critical mineral mining, processing, manufacturing, and recycling may be provided by the Central Government.
• A national critical minerals strategy for India, underpinned by the minerals identified in this study, can help focus on priority concerns in supply risks, domestic policy regimes, and sustainability.
• There is a need for establishing a National Institute or Centre of Excellence on critical minerals.

Reference

The Hindu | India’s reliance on China for critical minerals