Clean energy: India should deepen its global partnerships on critical minerals

COVID-19, coupled with Russia’s war on Ukraine, disrupted the supply chains of critical minerals; global partnerships are the way out

By Rohan Malhotra
Published: Friday 28 April 2023
Critical minerals such as copper, lithium, nickel, cobalt and rare earth elements are key to clean energy technologies. Image: iStock.

In light of its high import dependence on China, India is planning to bring out a policy framework and action plan for the exploration, processing, use and recycling of critical minerals in the country.

Critical minerals, both primary and processed, are key inputs in the production process of an economy.

The framework aims at self-sufficiency across several sectors and achieving the objectives of India’s clean energy transition.

The recent surge in demand for critical minerals across the world, owing to their strategic use in renewables and e-mobility, has been threatening developing countries with clean energy transition projects on the anvil.

Also read: Shift to clean energy means race for minerals is accelerating

The demand for these minerals will increase by two to three times the current trends by 2030, according to the International Energy Agency.

Unequal distribution, potential supply disruptions, price volatility resulting from overseas dependency and the lack of alternatives for these resources intensify the stress on the global mineral market. It is furthered by insufficient investment in the entire value chain and a lack of efficient industrial practices for recycling and recovery.

Critical minerals such as copper, lithium, nickel, cobalt and rare earth elements are key to clean energy technologies. China currently dominates the sector in terms of the concentration of deposits and processing industries.

India is on track to becoming the next global leader in the green energy transition. The country has been projected to be the world’s second-largest economy by 2050. India needs to actively engage and incorporate aspects of building a secured and resilient critical minerals supply chain.

Scaling up the manufacturing of green technologies, including solar panels, wind turbines and batteries for electric vehicles, will result in significant demand and dependency on the supply of a range of critical minerals in future.

Since these minerals, especially rare earth minerals, are key to a low-carbon economy, stronger regulations on this front are vital to addressing the environmental and social impacts of mining and processing these minerals.

The COVID-19 pandemic, coupled with Russia’s war on Ukraine, disrupted the supply chains of critical minerals. China, the most dominant player in the critical mineral supply chains, is still struggling with the COVID-19 lockdowns. As a result, the extraction, processing and exports of critical minerals are at risk of slowdown.

On the other hand, Russia is a major producer of nickel, palladium, titanium, sponge metal and the rare earth element scandium. And Ukraine, one of the major producers of titanium, also has reserves of lithium, cobalt, graphite and rare earth elements, including tantalum, niobium and beryllium. But the war between the two countries has disrupted global critical mineral supply chains.

Read more: Rechargeable batteries: UNCTAD report warns of raw material uncertainties

As the balance of power shifts across the continents, the critical mineral supply chains may get affected due to growing partnerships between China and Russia.

Supply chain security for the minerals and materials needed in clean energy technologies has become a strategic issue in the past few years. Despite their potential to delay the pace of clean tech deployment, these minerals have now become the latest frontier for geo-economic rivalries.

In order to ensure the mineral security of the country and to attain self-sufficiency, the Ministry of Mines has created a joint venture company, Khanij Bidesh India Ltd (KABIL). But the present policy regime reserves these minerals only for public sector undertakings. The country needs to encourage and incentivise the private players in the sector to venture globally in parallel with KABIL.

India is currently a member of The Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development, which supports the advancement of good mining governance. 

Recently, India and Australia decided to strengthen their partnership in clean energy transition and create resilient supply chains for critical minerals. Australia committed $5.8 million to the three-year India-Australia Critical Minerals Investment Partnership.

India must proactively engage with global players to secure its place in international partnerships on critical minerals. Last year, the United States formed the Minerals Security Partnership (MSP), a global alliance to reduce dependence on China.

MSP is an ambitious new alliance comprising Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom, the US and the European Commission.

The alliance intends to ensure that critical minerals are produced, processed and recycled in a manner that supports the ability of countries to realise the full economic and sustainable development benefit of their geological endowments. India needs to actively engage with global players to secure its seat in MSP.

The processing technologies required for utilising critical and strategic minerals are not widely available in India. The country needs to use the vast network of scientific and technical Institutions to identify the necessary technologies and work on developing the same domestically. It can be achieved by partnering with global alliances and strengthening its case for becoming an active member of the MSP.

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