The ‘Critical Factor’ in India’s Clean Energy Ambitions

Syllabus: GS3/ Economy

Context

• As India targets 500 GW of renewable energy capacity by 2030 and net-zero emissions by 2070, securing access to critical minerals has become a national priority.

What are Critical Minerals?

• These are minerals that are essential for economic development and national security.
• The lack of availability of these minerals or the concentration of extraction or processing in a few geographical locations could potentially lead to “supply chain vulnerabilities and even disruption of supplies”.

List of Critical Minerals

• Different countries have their own unique lists of critical minerals based on their specific circumstances and priorities.
• A total of 30 minerals were found to be most critical for India, out of which two are critical as fertilizer minerals: Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, Rare Earth Elements (REEs), Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.

Critical Minerals in India’s Green Transition

• Significance: Critical minerals are essential for technologies powering electric vehicles (EVs), solar panels, wind turbines, and energy storage systems.
  • Lithium and cobalt form the core of EV batteries, while REEs are vital for high-performance magnets in wind turbines and electronics.
• Market Outlook: India’s EV market is projected to grow at a CAGR of 49% (2023–2030) under initiatives like the Electric Mobility Promotion Scheme (EMPS) 2024. 
  • The battery storage market, valued at $2.8 billion in 2023, is set to expand rapidly with renewable energy integration.
• Import Dependence: India imports nearly 100% of its lithium, cobalt, and nickel, and over 90% of its REEs, leaving it vulnerable to supply disruptions.
  • China currently dominates 60% of global REE production and 85% of processing capacity, heightening strategic risks.

India’s Policy Push for Mineral Exploration

• Domestic Reserves: India has vast untapped mineral potential, with lithium in Jammu and Kashmir (J&K) and Rajasthan, and REEs in Odisha and Andhra Pradesh.
  • In 2023, the Geological Survey of India (GSI) identified 5.9 million tonnes of inferred lithium resources in J&K.
• Policy Initiatives: National Mineral Exploration Policy (NMEP), 2016 and Mines and Minerals (Development and Regulation) Act, 2021 have accelerated exploration through private participation and advanced surveys.
• KABIL (Khanij Bidesh India Ltd) is acquiring overseas mineral assets to ensure supply security.
• The National Critical Mineral Mission (NCMM) with a ₹34,300 crore plan aims to strengthen the value chain from exploration to recovery.

What are the challenges?

• Environmental Concerns: Mining and extraction pose ecological and social challenges.
• Limited Processing and Refining Capacity: India lacks sufficient domestic facilities for advanced processing and refining of critical minerals like lithium, cobalt, and REEs.
• Low Domestic Production: Despite having significant untapped reserves, India contributes less than 1% of global Rare Earth Element (REE) production, limiting its influence in global critical mineral markets and creating supply vulnerabilities.

Way Ahead

• Policy Incentives: Strong fiscal measures such as subsidies, tax incentives, production-linked schemes, and dedicated R&D funding are essential to make domestic exploration and processing economically viable.
• Speedy operationalisation of approved mining leases and fast-tracked exploration in mineral-rich regions like Chhattisgarh, Rajasthan, and Jammu & Kashmir will help boost supply security.
• Upgrading to mechanised mining equipment, automated processing plants, and sustainable waste management systems will improve efficiency and reduce environmental impact.
• Promoting a Circular Economy: With India generating nearly four million metric tonnes of e-waste annually, enhancing recycling and recovery of critical minerals from used batteries and electronic waste can significantly reduce import dependence.

Source: TH