Navigating the Future: The Importance of Critical Minerals in India's Energy Transition

Importance of Critical Minerals

Critical minerals, often referred to as the ‘new oil’, play a vital role in clean energy technologies, including solar modules, wind turbines, batteries, and transmission networks. Minerals such as lithium, nickel, copper, cobalt, silicon, graphite, and rare earth elements (REE) are essential for facilitating the energy transition. The International Energy Agency predicts a four-fold increase in demand for these minerals by 2040. Nonetheless, the concentration of mineral reserves in a limited number of countries poses significant risks to supply chains, particularly for developing economies such as India.

India’s National Initiatives

• Identification and Auctioning of Minerals:
  • The Ministry of Mines has identified 24 critical and strategic minerals essential for India’s growth.
  • These minerals are now set to be auctioned by the central government, which is anticipated to enhance exploration and revenue for state governments.
• Incentives for Exploration:
  • Private agencies are encouraged to explore deep-seated critical minerals through Exploration Licences.
  • The delisting of six minerals, including lithium, from the atomic minerals list has paved the way for private sector involvement in their exploration and mining.
• Auction of Mineral Blocks:
  • The government has initiated the auction of 20 critical and strategic mineral blocks to stimulate exploration and mining activities.

International Engagements

• Global Partnerships:
  • Under India’s leadership, the G20 has resolved to bolster the global critical mineral value chain.
  • India has become a member of the Mineral Security Partnership (MSP) to represent developing countries susceptible to global supply chain disruptions.
• Bilateral Agreements:
  • India and Australia have partnered on upstream critical mineral technologies through the India-Australia Comprehensive Economic Cooperation Agreement (CECA).
  • Khanij Bidesh India Ltd (KABIL) has finalized a $24 million lithium exploration and mining agreement with Argentina for five lithium blocks.
• Multilateral Forums:
  • India can capitalize on forums like the Quad, the Indo-Pacific Economic Framework for Prosperity (IPEF), and the European Critical Minerals Club to access minerals from diverse geographies.

Future Opportunities

• Technological Capability:
  • The government and industry should prioritize building technological capabilities in critical mineral exploration, mining, and processing.
  • Awareness events and partnerships with academic institutions can help bridge the gap in specialized techniques for processing and refining these minerals.
• Circular Economy:
  • India should advocate for the reuse and recovery of critical minerals from electronics and clean energy equipment waste through the Lifestyle for the Environment (LiFE) mission and G20 Voluntary High-Level Principles.
• Environmental, Social, and Governance (ESG) Norms:
  • Indian industries are encouraged to adopt superior ESG practices to boost transparency and traceability in supply chains, thereby positioning their products to command a premium.
• Trade Negotiations:
  • Negotiating agreements with large demand markets such as the US, Europe, and Japan is vital to mitigate trade barriers and secure supportive measures for Indian manufacturers.

Conclusion

India has made considerable strides to fortify its position in the global critical minerals value chain. A stable and progressive policy framework, coupled with a large domestic market, can give Indian industries a competitive edge. By developing technological capabilities, promoting a circular economy, adopting exemplary ESG practices, and engaging in strategic trade negotiations, India can emerge as a reliable node in the global supply chain for critical minerals.