Syllabus: GS 3/Economy
In News
- India’s Hunt for Critical Minerals report recently published by the Institute for Energy Economics and Financial Analysis (IEEFA)
India’s landscape
- India, the world’s third-largest energy consumer, is transitioning to a greener energy landscape driven by global climate commitments, reduced reliance on fossil fuels, and enhanced energy security.
- This shift relies heavily on critical minerals essential for renewable technologies like solar panels, wind turbines, electric vehicles, energy storage systems and also for defense and electronics.
- Challenges : India faces challenges in securing these minerals, including supply disruptions and geopolitical factors.
- India’s reliance on imports, particularly from China, poses risks, as highlighted by U.S.-China trade tensions in 2019.
- Ethical concerns, such as child labor in cobalt mining and environmental impacts, further complicate the mining landscape. India must establish policy frameworks to address these issues.
- Government Initiatives: The Indian government is actively working to improve domestic production through mining block auctions and the Critical Minerals Mission, which can enhance refining and processing capabilities.
- India has initiated a multi-pronged strategy to acquire critical minerals through international partnerships and domestic exploration.
Key Findings of recent report
- Focus: The report focuses on five critical minerals—cobalt, copper, graphite, lithium, and nickel—analyzing import dependency, trade dynamics, domestic availability, and price fluctuations.
- Import Dependency: : India heavily relies on imports for critical minerals essential for its energy transition, particularly lithium, cobalt, and nickel, with 100% reliance on imports for these minerals.
- Demand for these minerals is expected to more than double by 2030, while domestic mining production will take over a decade to develop.
- Minerals at Risk: High import dependency exists for graphite (natural and synthetic), lithium oxide, nickel oxide, copper cathodes, nickel sulphate, cobalt oxide, and copper ores, some of which come from geo politically risky countries.
- Geopolitical Risks: Countries like Russia, Madagascar, Indonesia, Peru, and China pose high geopolitical risks for sourcing critical minerals.
- Imports of lithium oxide and nickel oxide are mainly from Russia and China, which poses trade risk
- India is particularly reliant on China for synthetic and natural graphite .
- For copper and nickel, India mainly imports from Japan and Belgium, and the report suggests diversifying suppliers by looking at the U.S., which is a significant copper producer.
Suggestions
- India aims for 500 GW of non-fossil fuel-based electricity capacity by 2030, with a current capacity of 201 GW.
- Achieving net-zero emissions by 2070 may require installing around 7,000 GW of renewable energy.
- Therefore ,Government support in technology development and funding is vital for promoting domestic production of critical minerals, essential for meeting renewable energy targets.
- The report emphasizes the need for India to develop a well-crafted import strategy to mitigate trade risks and strengthen international relationships for securing essential minerals.
- India can explore investment opportunities in resource-rich, friendly nations, such as Australia, Chile and some African countries like Ghana and South Africa.
Source:ET