Critical Earth Minerals

Critical Earth Minerals

● The raw materials i.e., minerals, that

are necessary for renewable energy,
clean technology, and our transition to
a more sustainable, low-carbon future
are often referred to as critical
minerals.
 Critical Earth Minerals

● The term “critical minerals” is the most common terminology, and it is often
used interchangeably with the terms “strategic minerals,” “strategic and
critical minerals,” and “energy transition minerals.” There is no universally
agreed upon definition of what “criticality” means, and criticality changes over
time, depending on the needs of society and the availability of supply.
 Critical Earth Minerals

● Minerals are considered critical when they are of high economic importance but
are scarce and therefore subject to high import dependency. A key element in
this definition is the vulnerability of the supply chain due to risks associated
with potential supply disruptions, governance issues, political risks, or the
overconcentration of production in a few countries. This definition is largely
adopted by European countries, the United States, and Japan, for instance.
Critical Earth Minerals
 Rare Earth Elements
What are rare earth elements (REEs)?
● REEs are a set of 17 metallic elements that are considered critical because of
their properties. Depending on their atomic numbers, there are two groups of
REE: Heavy REE (9 elements) and Light REE (8 elements).
Rare Earth Elements
 Rare Earth Elements
What makes REEs rare?
● Unlike the name suggests, REEs are not rare. In fact, they are relatively
abundant and quite commonly available in the Earthʼs crust. What makes these
materials rare is how difficult they are to extract and how complex it is to
process them. The single largest and most important end-use for REEs is
permanent magnets, making up an estimated 29% of demand in 2020.
Permanent magnets, and thus REEs, are essential for clean technologies and
consumer electronics, such as electric vehicles, wind turbines, televisions,
mobile phones, and other digital devices.
 Rare Earth Elements
● The surging demand for “critical” minerals has been driven for the most part by
their role in the transition to clean energy and a low-carbon economy. The
specific demand drivers can be classified into six ways:
 Rising Demand

● Rising demand for critical minerals will also place even more significant
pressure on extraction, production, and refining processes, presenting both
challenges and opportunities for governments to consider.
 Sources of Supply
● Minerals and metals are extracted and produced by large-scale mining and
artisanal and small-scale mining (ASM) operations. Since it typically takes
between 5 and 10 years for large-scale mining to become operational, ASM is
playing an increasingly significant role in the production of critical minerals.
E.g., In the case of cobalt in the Democratic Republic of the Congo, ASM
accounts for around 15%–35% of cobalt production.
● In addition to primary sources, critical minerals can also be produced through
secondary sources, such as through wastewater for REEs and mine tailings for
tungsten, tantalum, and molybdenum. Increasingly, recycling, particularly in
the context of the circular economy.
 Sources of Supply

● New or alternative sources are also emerging, including deep-seabed mining,

which is considered controversial but a feasible frontier for manganese, cobalt,
nickel, and REEs; marine-derived mining for lithium.
 Key risks to consider
● Supply risks arising from a concentration of mineral production and processing in
just a few countries and companies, scarcity of supplies from geological
depletions over time, and technological innovation that will give rise to
substitutions and new sources of materials.
● Off-take agreements could present challenges around a mismatch between the
production volume and the required volume, pricing issues due to price volatility
that could be exacerbated by external shocks (e.g., COVID-19), and geopolitical
instabilities (e.g., the Russia–Ukraine war).
● Macroeconomic risks resulting from revenue volatility due to cyclical volatility in
the global economy, currency crises, and global fluctuations in commodity prices,
as well as issues related to what is known as Dutch disease.
Challenges before Government of India

● The supply-side risks for a mineral are based on the domestic endowment,
geopolitical risks of the trade, substitutability and recycling potential.
Supply risks can be manifested at any of the four stages in the value chain of minerals:
● Extraction (exploration and mining),
● Conversion (processing of ore into usable form),
● Transfer (infrastructure, trade, and geopolitical restrictions), and
● Consumption (efficient use in the manufacturing of products).
Challenges before Government of India

● Thus, a country with limited supplies of such minerals and with

ambitious plans for manufacturing has to think strategically about the
overall availability of these minerals.
 Challenges pertaining to Critical Minerals Sector

● In the recent assessment, CSEP extended the earlier minerals assessment for
23 minerals as critical minerals for India.
The assessment was based on their
● Economic importance (demand-side factors) and
● Supply risks (supply-side factors) which are determined through the
evaluation of specific indicators.
Minerals such as antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and
strontium are among the 23 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.
Challenges pertaining to Critical Minerals Sector

The China ʻThreatʼ

● China is typically not considered as a major resource exporter and yet is
worldʼs largest producer of 18 critical minerals.
● The IEA in its report in 2020 has identified that China produces 63 per cent of
worldʼs output of REEs and 45 per cent of molybdenum.
● More than 70 percent of cobalt is mined in the Democratic Republic of Congo,
with China having a majority ownership of these mines.
● Australia produces 55 percent of worldʼs lithium with China as its major
importer.
Challenges pertaining to Critical Minerals Sector

The China ʻThreatʼ

● Chinaʼs share of refining is around 35 percent for nickel, 50-70 percent for
lithium and cobalt, and nearly 90 percent for rare earth elements. China thus
plays a crucial role in the global supply chains of critical minerals.
Challenges pertaining to Critical Minerals Sector

No Domestic availability of Critical Minerals in India

● India has a significant mineral geological potential, many minerals are not
readily available domestically.

Reservation of minerals only for public sector undertakings

● 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 the extraction of these minerals
only for Public Sector Undertakings.
Challenges pertaining to Critical Minerals Sector

Skewed Distribution
●While the demand for critical minerals is set to increase because of the
global preference and emphasis on renewable energy, the global supply
chain of the critical minerals is highly concentrated and unevenly
distributed,
Dependency of China
●China, the most dominant player in the critical mineral supply chains,
struggled with Covid-19-related lockdowns.
●As a result, the extraction, processing and exports of critical minerals
were at risk slowdown.
Supply chain disruption due to 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.
 A Shift in Balance of Power: Impacts the
Developing countries

● 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 G7ʼs Sustainable Critical
Minerals Alliance, while developing countries have missed out.
 Lack of mineral 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.
Government on Critical Earth Minerals problem

Indian government has implemented various measures to address critical earth

metals:
● National Mineral Policy: A policy recognizing the importance of critical earth
metals, aiming to promote sustainable development, judicious use, and
domestic manufacturing.
● National Mineral Exploration Policy: Encouraging private sector participation
and transparency in exploration activities through initiatives like mineral block
auctions.
Government on Critical Earth Minerals problem

● Research and Development: Support for scientific institutions to develop

environmentally friendly technologies for exploration, extraction, processing,
and recycling of critical earth metals.
● International Cooperation: Active participation in global forums, conferences,
and collaborations to share knowledge and explore strategic partnerships with
resource-rich countries.
● Promotion of Domestic Manufacturing: Initiatives to establish special
economic zones, provide incentives for manufacturing units, and support
research and development in sectors like electronics, renewable energy, and
defence.
Government on Critical Earth Minerals problem

● Recycling and Circular Economy: Encouragement of recycling and the adoption

of circular economy practices to recover and reuse critical earth metals from
electronic waste, industrial by-products, and end-of-life products, reducing
dependence on primary sources.
 Lithium Discovery

● 5.9 million tonnes inferred resources of lithium” in the Salal-Haimana area

of Reasi district, Jammu & Kashmir, by the Geological Survey of India.
● Lithium-ion batteries are used in wind turbines, solar panels, and electric
vehicles, all of which are crucial in a green economy.
● The global electric vehicle market is projected to reach $823.75 billion by
2030, registering a Compounded Annual Growth Rate (CAGR) of 18.2%
from 2021 to 2030,” Indiaʼs market is projected to register a CAGR of
23.76% by 2028. India is seeking to secure its critical mineral supplies and
build self-sufficiency in this sector.
 Need of the Hour

● Imports & need of self-sufficiency

○ India currently imports all of its Li from Australia and Argentina and 70%
of its Li-ion cell requirement from China and Hong Kong.
○ India is seeking to secure its critical mineral supplies and build
self-sufficiency in this sector. The lithium reserves in J&K could boost the
domestic battery-manufacturing industry.
○ If the perceived size of the mineral reserves in J&K is borne out by further
exploration, India could jump ahead of China regarding its Li stockpile.
 Need of the Hour

Expansion of Electric Vehicles

○ The J&K reserves will also help advance the Indian governmentʼs ambitious plan
of 30% EV penetration in private cars, 70% for commercial vehicles, and 80% for
two and three-wheelers by 2030 for the automobile industry.
○ They will strengthen Indiaʼs National Mission on Transformative Mobility and
Battery Storage as well
 CONCERNS

○ Environmental consequences
○ Geographically unstable region
○ Geopolitical concerns