Critical minerals & supply chain challenges

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    In Context

    A recent working paper from the Centre for Social and Economic Progress (CSEP) extends the earlier minerals assessment for 23 minerals by assessing the criticality levels of 43 select minerals for India based on their economic importance.

    More about the critical minerals

    • About:
      • Critical minerals are elements that are the building blocks of essential modern-day technologies, and are at risk of supply chain disruptions. 
      • These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines
    • Lists of critical minerals:
      • Based on their individual needs and strategic considerations, different countries create their own lists.
      • Such lists mostly include 
        • Graphite, lithium and cobalt, which are used for making EV batteries; 
        • Rare earths that are used for making magnets and 
        • Silicon which is a key mineral for making computer chips and solar panels. 
      • Aerospace, communications and defence industries also rely on several such minerals as they are used in manufacturing fighter jets, drones, radio sets and other critical equipment.
    • India’s critical minerals:
      • Minerals such as antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium are among the 22 assessed to be critical for India
        • Many of these are required to meet the manufacturing needs of green technologies, high-tech equipment, aviation, and national defence.
      • While India has a significant mineral geological potential, many minerals are not readily available domestically. 

    Criticality of these Minerals

    • As countries around the world scale up their transition towards clean energy and digital economy, these critical resources are key to the ecosystem that fuels this change. 
    • Any supply shock can severely imperil the economy and strategic autonomy of a country over-dependent on others to procure critical minerals.
    • But these supply risks exist due to rare availability, growing demand and complex processing value chain
    • Many times the complex supply chain can be disrupted by hostile regimes, or due to politically unstable regions.

    Challenges

    • India faces global and domestic challenges in assuring resilient critical minerals supply chains. 
    • International Challenges:
      • China:
        • China, the most dominant player in the critical mineral supply chains, still struggles with Covid-19-related lockdowns. 
        • As a result, the extraction, processing and exports of critical minerals are at risk of slowdown.
      • Russia Ukraine war:
        • Russia is one of the significant producers of nickel, palladium, titanium sponge metal, and the rare earth element scandium. 
        • Ukraine is one of the major producers of titanium. It also has reserves of lithium, cobalt, graphite, and rare earth elements, including tantalum, niobium, and beryllium. 
        • The war between the two countries has implications for these critical mineral supply chains.
      • Shifting Balance of power:
        • As the balance of power shifts across continents and countries, the critical mineral supply chains may get affected due to the strategic partnership between China and Russia. 
        • As a result, developed countries have jointly drawn up partnership strategies, including the Minerals Security Partnership (MSP) and G7’s Sustainable Critical Minerals Alliance, while developing countries have missed out.
    • Domestic challenges:
      • Scarce reserves:
        • Manufacturing renewable energy technologies would require increasing quantities of minerals, including copper, manganese, zinc, and indium. 
        • Likewise, the transition to electric vehicles would require increasing amounts of minerals, including copper, lithium, cobalt, and rare earth elements.
        • However, India does not have many of these mineral reserves, or its requirements may be higher than the availability, necessitating reliance on foreign partners to meet domestic needs.
      • Inadequate listing:
        • Many critical and strategic minerals constitute part of the list of atomic minerals in the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957.
        • However, the present policy regime reserves these minerals only for public sector undertakings.

    Suggestions and Way Forward 

    • Creating a new list:
      • Given the increasing importance of critical and strategic minerals, there is an imperative need to create a new list of such minerals in the MMDR Act
        • The list may include minerals such as molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, the platinum group of elements, and fertiliser minerals such as glauconitic, potash, and phosphate (without uranium).
      • These minerals must be prospected, explored, and mined on priority, as any delays may hinder India’s emissions reduction and climate change mitigation timeline.
    • Encouraging exploration:
      • The reconnaissance and exploration of minerals must be encouraged, with particular attention given to deep-seated minerals. 
        • This will call for a collective effort by the government, ‘junior’ miners, and major mining companies. 
    • Processing & assembly:
      • India needs to determine where and how the processing of minerals and assembly of critical minerals-embedded equipment will occur.
    • Securing supply chain:
      • In addition, India must actively engage in bilateral and plurilateral arrangements for building assured and resilient critical mineral supply chains. 
    • Periodic assessment:
      • Furthermore, the assessment of critical minerals for India needs to be updated every three years to keep pace with changing domestic and global scenarios.
    • AatmaNirbhar in critical minerals:
      • India requires a critical minerals strategy comprising measures aimed at making the country AatmaNirbhar (self-reliant) in critical minerals needed for sustainable economic growth and green technologies for climate action, national defence, and affirmative action for protecting the interests of the affected communities and regions.
    • National critical minerals strategy:
      • A national critical minerals strategy for India, underpinned by the minerals identified in this study, can help focus on priority concerns in supply risks, domestic policy regimes, and sustainability.

    Mains Practice Question 

    [Q] A national critical minerals strategy for India can help focus on priority concerns in supply risks, domestic policy regimes, and sustainability. Enumerate.