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Critical Minerals Investment Partnership
News: Recently, India and Australia decided to strengthen their partnership in the field of projects and supply chains for critical minerals.
What are Critical Minerals?
• Critical minerals are elements that are the building blocks of essential modern-day technologies and are at risk of supply chain disruptions.
• Based on their individual needs and strategic considerations, different countries create their own lists. However, such lists mostly include graphite, lithium and cobalt, which are used for making EV batteries; rare earth that is used for making magnets and silicon which is a key mineral for making computer chips and solar panels.
• India’s Department of Science and Technology, in collaboration with the Council on Energy, Environment and Water, drafted the Critical Minerals Strategy for India in 2016, with a focus on India’s resource requirements till 2030. The Indian Critical Minerals Strategy has identified 49 minerals that will be vital for India’s future economic growth.
Significance of Critical Minerals
• Manufacturing Fighter Jets
• Mobile phones, computers to Batteries
• EV's, Solar Panels, Wind Turbine
• Drones, Radio sets
Reasons why they are considered Critical source:
• Critically important towards Transition to Green Energy - As countries around the world scale up their transition toward clean energy and a 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.
• Complex Challenges - 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.
• Increased Demand - According to the United States (US) Government, as the world transitions to a clean energy economy, global demand for these critical minerals is set to rapidly increase by 400-600% over the next several decades, and, for minerals such as lithium and graphite used in EV batteries, demand will increase by even more as much as 4,000%. They are critical as the world is fast shifting from a fossil fuel- intensive to a mineral-intensive energy system.
What threats does China pose to the world in this sector?
• As per the 2019 US Geological Survey (USGS) Mineral Commodity Summaries report, China is the world’s largest producer of 16 critical minerals.
• The level of concentration is even higher for processing operations, where China has a strong presence across the board. China’s share of refining is around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.
• China also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.
• China, according to a report on the role of critical minerals by the International Energy Agency (IEA), was responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.
• Thus, increased dependence on China will hurt major economies if steps are not taken today to become self-reliant.
How do countries around the world plan to overcome this issue?
• In 2021, the US ordered a review of vulnerabilities in its critical minerals supply chains and found that an over-reliance on foreign sources and adversarial nations for critical minerals and materials posed national and economic security threats. Hence, US has shifted its focus on expanding domestic mining, production, processing and recycling of critical mineral.
• India has set up KABIL or the Khanij Bidesh India Limited, a joint venture of three public sector companies, to ensure a consistent supply of critical and strategic minerals to the Indian domestic market. It ensures the mineral security of the nation; it also helps in realising the overall objective of import substitution.
• The United Kingdom (UK) unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals.