- Tuesday, April 22, 2025
Critical minerals are those minerals that are essential for economic development and national security.
By: Isha Dhir
WITH India’s recent Mines and Minerals [Development and Regulation] Amendment Bill, 2023, the locus of attention now revolves around critical minerals as the amendment introduces major reforms in mining sector.
What is a critical mineral?
Critical minerals are those minerals that are essential for economic development and national security. They are vital to power the global transition to a low carbon emission economy and the renewable energy technologies that will be required to meet the ‘Net Zero’ commitments of an increasing number of countries around the world.
The US has declared 50 minerals critical in light of their role in national security or economic development. Japan has identified a set of 31 minerals as critical for their economy. The UK considers 18 minerals critical, the EU 34 and Canada 31.
The expert committee under the ministry of mines has identified a set of 30 critical minerals for India.
MINES AND MINERALS AMENDMENT BILL,2023
The Bill provides to remove certain minerals from the list of atomic minerals such as lithium, titanium and others that are used in space industry, energy sector, electric batteries that are critical in net-zero emission commitment of India. India which depends on imports for most of these important minerals due to less exploration resulted for existing legal provisions. Now with the removal, it will be open to private sectors.
Central government has been empowered to exclusively auction mineral concessions for certain critical minerals, which would increase the pace of auction and early production of the minerals which are now indispensable for new technologies such as Space, IT, food security, and others.
The proposed exploration license would facilitate, encourage, and incentivise private sector participation in all spheres of mineral exploration for critical and deep-seated minerals. This will bring private agencies in the scenario with advanced technology, finance and expertise from across the world in geological data acquisition, processing and interpretation in the risk-taking ability for discovery of mineral deposits.
Introducing exploration license for deep-seated and critical minerals, as there is an urgent need to attract FDI in these sectors. Even though 100 per cent FDI is allowed in mining and exploration sector through automatic route, currently there is no significant FDI received in these sectors. Deep-seated minerals such as gold, silver, copper, zinc, lead, nickel-cobalt, platinum group of minerals, diamond, and others are high-value minerals.
INDIA-AUSTRALIA CRITICAL MINERALS INVESTMENT PARTNERSHIPS
Australia confirmed that it would commit a $5.8 million to the three-year India-Australia Critical Minerals Investment Partnership. Australia’s Critical Minerals Facilitation Office and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.
What is the China threat?
China is the world’s largest producer of 16 critical minerals. As per IEA report, China is responsible for 70-60 per cent of global production of cobalt and rare earth elements in 2019, its share of refining rare earth elements stands in 90 per cent.
It controls cobalt mines in the Democratic Republic of Congo, where 70 per cent of this mineral is sourced.
Other nations in the scenario
US
It has shifted its focus on expanding domestic mining, production, processing and recycling of critical minerals and materials. In June last year, USA, Canada, and Australia have enacted regulatory legislation, while resource rich nations such as Indonesia, Namibia, Zimbabwe have imposed restrictions on the export of unprocessed mineral ores.
INDIA
It has set up KABIL or Khanij Bidesh India Limited, a joint venture of three public sector companies to ensure supply of critical and strategic minerals to the Indian domestic market.
Energy transitions & its challenges
1. Based on 2022 World Energy Outlook, demand for critical minerals is set to soar over the next two decades as the world pursues ‘NET ZERO’ goals with prices of critical minerals such as copper expected to increase in coming years due to growing demand surpassing supply. This will likely disrupt the production costs of devices such as solar panels and electric vehicles.
2. Industries such as automakers, battery cell makers and others are becoming more active in the critical minerals value chain. This includes engagement in activities in the form of mining and refining and establishing long term agreements for purchasing minerals.
3. US-China trade war and Russia -Ukraine war led to sanctions and disruptions in established trade patterns. This has resulted in resource nationalism where countries prioritize their own resources and impose restrictions on exports leading to uncertainties in global trade flows.
Russia a major producer of nickel, palladium, titanium sponge metal and scandium. Whereas, Ukraine a significant producer of titanium. The ongoing war between them raises concerns about the stability and availability of these critical minerals in the global supply chains.
4. China -Russia partnership-This alliance could have implications for the stability and availability of critical minerals. In response, developed countries have formed collaborative strategies such as Minerals Security Perspective and the G7”s Sustainable critical Minerals Alliance.
Developing countries are not actively involved in these initiatives missing out benefits and protection offered by these partnerships.
5. EU’s green transition is at the center of its economic transformation and Ukraine war caused many upsets. But the main goal has not changed.
Most recently for instance, the last hurdle with Germany and a few others was cleared so that a mandate comes into force requiring sales of only zero emission vehicles from 2035.
The EU’s commission announcement on Net 0 Industry Act and the Critical Raw Materials Act that set ambitious targets was criticized as lacking incentives and regulations to help industry meet the targets.
Significance other than economic
1. National Security: These minerals are vital for defense, aerospace, nuclear, and space applications, necessitating the use of high-quality and reliable materials capable of withstanding extreme conditions and performing complex functions. To ensure defense preparedness and self-reliance, India must secure a steady supply of critical minerals.
2. Environmental Sustainability: They are integral to the transition toward clean energy and a low-carbon economy, enabling the reduction of India’s reliance on fossil fuels and greenhouse gas emissions. With a commitment to attaining 450 GW of renewable energy capacity by 2030, these minerals are essential for achieving India’s green objectives.
3. International Cooperation: These collaborations enable India to diversify its import sources, reduce dependency on China, and enhance mineral security and resilience.
The global scenario provides us with important lessons .Driving towards decarbonization and energy transition ,may throw challenges due to limited availability of key minerals and metals required for a swift transition .The success of our country in achieving its goal will be dependent on uncertainities and fluctuations of the world market for these critical resources.
Along with private players inclusion in mining sector, research on relevant areas of technology such as recycling of minerals and finding the correct substitutes should be kept in mind.
Evolving an ecosystem involving government agencies, public sector undertakings, private industry and educational organisations can be a fruitful way forward.
The writer is a second-year student of masters, department of political science and international studies, Pondicherry University, India.
