Critical Minerals security: Path to Greener Future

Critical minerals are the foundation for enabling the global transition to greener future, by being an important element / building block in manufacturing of renewables’ equipment (e.g., wind turbines), electric vehicles and underlying semiconductor chips/ digital technologies. As the global economy aspires for a greener future/ radical energy transition, there is multifold increase in demand of critical minerals (for example 40X for Lithium, 25X for Graphite, 20X for Nickel and 7X for Rare Earth metals) over the transition period.^[1]

Accentuating the increased demand is also the underlying trend of increased mineral intensity. For example, an electric car requires six times more mineral inputs than a conventional car and an onshore wind plant requires nine times more mineral inputs than a gas-fired plant.^[2]

Critical minerals’ security is hence now featuring as a key strategic theme across regions, countries and for leading majors. 

Production of critical minerals is highly concentrated, with top three countries controlling over 75 per cent of global output for Lithium, Cobalt, and Rare Earth Elements. Australia contributes 50 per cent of global production for Lithium, while The Democratic Republic of the Congo and China produce 70 per cent and 60 per cent of Cobalt and Rare Earth elements, respectively.^[3]

The level of concentration is even higher for mineral processing operations, where China’s share of refining is around 35 per cent for Nickel, 70-80 per cent for Lithium and Cobalt, and approximately 90 per cent for Rare Earth elements. Additionally, Chinese companies have made large investments in foreign assets in Australia, Chile, the DRC and Indonesia to secure these minerals.^[4]

Given, the significant strategic nature, there are three specific trends emerging:

1. Establishing critical minerals security, a national priority – South Korea has brought in comprehensive resource security measures, Japan has acknowledged the critical minerals amongst its strategic sectors, and Australia has identified a war chest to further enhance its global positioning.
2. Multi country collaboration – There are partnerships emerging at multilateral forum (e.g. QUAD), across countries (e.g. South Korea forging partnerships with Australia, Indonesia, and Kazakhstan).
3. Backward integration by consuming majors – In addition to the investments by existing miners, leading consuming majors are evaluating entry into mining of certain critical minerals like Nickel. This further provides an illustration around the need to have access to critical minerals for both de-risking and laying appropriate foundation for future growth.

Resource nationalism has also emerged as a new challenge. In April 2022, Mexico nationalised its Lithium reserves and recently Chile which hosts largest lithium reserves, has announced plans to nationalize its Lithium industry. Similarly, Indonesia has banned exports of Nickel ore to develop local downstream operations and extract greater value.

For the critical mineral strategy to be successful, India needs to develop the entire value chain from mineral exploration to recycling of metals. This implies building capacity at each stage of the value chain (mineral exploration, mineral extractions, intermediate processing, manufacturing, and recycling).

India has already taken several steps to develop its critical minerals sector including forming a JV company in August 2019 to secure critical minerals from overseas locations.

India has proposed high-level guiding principles for accelerating the development of global critical mineral value chain required for sustainable energy transition during the G20.

In June-2023, India released a comprehensive list of 30-critical minerals^[5] necessary for economic development & national security and joined the Minerals Security Partnership, an alliance of 14 developed countries led by the USA^[6], to ensure that critical minerals are produced, processed and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments.

In August-2023, commercial mining of six critical minerals i.e., Lithium, Beryllium, Niobium, Tantalum, Titanium & Zirconium and deep-seated minerals like Gold, Silver and Copper were allowed through an amendment to the Mines and Minerals (Development & Regulation) Act, 1957.

GoI is developing its first Critical Mineral Policy, which includes establishing a common pool of stockpiling critical minerals with friendly countries/ groupings, promoting indigenous research, utilizing trade agreements and providing fiscal incentives.

India is also embarking on its Samudrayaan Mission to conduct deep seabed mining in search of critical minerals. 

To boost critical minerals supply chain in India few initiatives that government may take into consideration:

• Onboarding battery manufacturers and automakers to invest in mineral assets abroad and process them locally, ensuring uninterrupted supply for batteries and electric vehicles.
• Encouraging JVs with foreign companies and develop a local ecosystem for refining and processing critical minerals.
• Introducing Advance Market Commitments to provide stability to demand guidance for interested players ensuring adequate capabilities in the private sector.
• Establish a Critical Mineral Fund for geological exploration and financing early-stage critical mineral projects off the ground.
• Deep Ocean Mission (“Samudrayaan Mission”) in the Critical Mineral Strategy can be explored. Exploration activities conducted by the MoES indicate vast resources of Copper, Nickel, Cobalt, and Manganese, which can be of help in reducing India’s reliance on imports.
• Recovery of critical metals through recycling will play a critical role from supply chain resilience and sustainability perspective.^[7] India will have to invest in creation of the supply chain ecosystem to make the metal recovery through recycling of end use products and batteries. R&D will also play an important role in this regard.
• As clearly mentioned in the report published by Ministry of Mines in June 2023^[8], a national institute or center of excellence on vital minerals may to be established, following in the footsteps of CSIRO, an Australian government corporation and one of the largest mission-driven multidisciplinary science and research organizations in the world. The Centre of Excellence for Critical Minerals can focus on identifying more efficient ways for discovering next generation critical mineral deposits through geological knowledge, data analytics and modelling, and machine learning capability.

Overall, while India has already initiated few key action steps in the right direction, there is need to develop a comprehensive strategy to ensure that India can have a stronger grip on the moving parts and thus become resilient in its journey towards ensuring its critical minerals security. Government of India needs to bring in the key stakeholders (mineral exploration agencies, miners, battery manufacturers, automakers, renewables equipment manufacturers, R&D institutions, relevant government departments and PUS’s) centrally on that strategy table and specify role expectations from each of them. This must be treated as a national program rather than individual stakeholder trying to find solutions to their individual needs.

^[1] The Role of Critical Minerals in Clean Energy Transitions, IEA, May 2021, accessed on 29-Sep-2023
^[2] The Role of Critical Minerals in Clean Energy Transitions, IEA, May 2021, accessed on 29-Sep-2023
^[3] The Role of Critical Minerals in Clean Energy Transitions, IEA, May 2021, accessed on 29-Sep-2023
^[4] The Role of Critical Minerals in Clean Energy Transitions, IEA, May 2021, accessed on 29-Sep-2023
^[5] Critical Minerals for India, Ministry of Mines, June 2023, accessed on 29-Sep-2023
^[6] The Print, 01-Jul-2023, accessed on 29-Sep-2023
^[7] The Role of Critical Minerals in Clean Energy Transitions, IEA, May 2021, accessed on 29-Sep-2023
^[8] Critical Minerals for India, Ministry of Mines, June 2023, accessed on 29-Sep-2023
 

A version of this article was published on Oct 05, 2023  by Manufacturing Today online