The world today is defined by modern industries, high-tech equipment, digitised environment, data centres, semiconductors, AI, precision weapons, space exploration, climate action, and green energy, among others. These industries are dependent upon certain essential minerals as raw material. Their supply chain vulnerability has transformed these minerals into a powerful geopolitical tool.
India shares close geological similarity with the mineral-rich regions of the world, like Western Australia, Africa and Antarctica. While international environmental protocols prohibit mining activities in Antarctica, other mineral-rich regions like Western Australia and South Africa have successfully exploited their mineral resources. But unlike its mineral-rich cousins, India’s deep-seated mineral wealth remains undiscovered and almost untouched. The reason for this is the country’s near-zero mineral exploration efforts.
Minerals are produced from mines. A mine can only be set up after confirming its economic viability through a credible and accurate assessment. An assessment of this nature, of a resource buried deep under the earth's surface, is a highly specialised job, time-consuming and involves significant expenditure. This preliminary ‘search and confirmation’ process is referred to as mineral exploration. There is no guarantee of success at the end of this elaborate ‘search’ process. The global success rate of mineral exploration is 1:100! The average time taken from the preliminary discovery of a mineral deposit to the setting up of a mine is 15 to 17 years.
The mineral ores extracted from mines need to be refined. Refining is also a complex and elaborate process which involves crushing, separation, concentration, and purification and requires appropriate technology and special equipment. There are environmental concerns as well.
Coming to critical minerals, these are minerals with high economic or national security concerns and a high risk of supply disruption. The list of minerals assessed as ‘critical’ would vary from country to country. The EU has a list of 34, the US has 50, while India has a list of 30 critical minerals.
Rare earths, a set of 17 minerals grouped under a generic name, is a typical example of critical minerals. Rare earths, per se, are not rare. They have unique names such as Scandium, Yttrium, Lanthanide, Neodymium, Dysprosium, Samarium, Promethium etc. What makes them ‘rare’ is the difficulty in finding them in adequate concentration to be economically extracted.
China accounts for roughly 70 per cent of global rare earths production. It also tops the list of rare earths reserves with about 44 million metric tonnes. India ranks third with an assessed rare earths reserve of 6.9 million tonnes.
Rare earths is an essential performance enhancer for industries worth trillions of dollars. Every modern high-tech equipment and common-use device today requires rare earths, albeit in small quantities. It is irreplaceable with no substitute available, as of now. Rare earths are also very critical for renewable energy, aerospace & defence industries and also plays a major role in nuclear reactors as control rods and neutron absorbers.
Till the 1980s, the Mountain Pass mine in the United States was the predominant global rare earths producer, supplying about 70 per cent of the total global rare earths. However, the mine ran into major environmental issues in the 80s and was ordered to clean up toxic tailings. This proved prohibitively costly, leading to the shutdown of the mine. China, blessed with abundant reserves, had been systematically catching up and was ready to step in. It looked like a smart thing for the world then, particularly the US, to outsource the dirty work and environmental concerns to China.
The situation was tailor-made for China. It stepped in, boosted production providing a strong state subsidy, and flooded global markets with rare earths at predatory prices. Facilities elsewhere were forced to close down. By 2010, China had established a near monopoly, not just in rare earths mining, but across the entire supply chain from the mineral ore production, to refining, to manufacturing rare earths magnets.
There are other minerals too that are extremely essential for green energy and the modern high-tech industry. A typical modern electric car requires six times more mineral inputs than a conventional car. Similarly, an offshore wind plant requires 13 times more mineral resources than a gas-fired plant of similar output. Semiconductors are another pillar of modern high-tech industries which require a set of high-value mineral inputs.
Rare earths, Lithium, Cobalt, Nickel, Copper, Gallium, the Platinum group of minerals, Tantalum, Tellurium, Tungsten, Niobium, Indium, Germanium, Antimony, Graphite etc fall into the category of critical minerals of most countries.
The importance and non-replaceable status of these minerals calls for a careful study of their supply status from an Indian perspective.
India has a near 100 per cent import dependency for rare earths as well as Lithium, Cobalt, Nickel, Vanadium, Niobium, Germanium, Rhenium, Beryllium, Tantalum, Strontium etc and about 50 to 85 per cent dependency for Copper, Titanium, Graphite, Manganese, Bismuth, and Zirconium.
India and the world have now woken up to the fact that significant parts of the critical minerals supply chains, including mining, refining and even the mid-stream components manufacturing are highly concentrated, and that too in Chinese hands.
China is, today, using this control over the critical minerals supply chain as an effective hedge against Trump’s tariff war, apart from holding the rest of the world to ransom whenever required.
India, with it’s healthy economic growth and a GDP on the verge of becoming the third largest, is set to witness a huge rise in it’s energy demand. Transition to green energy is non-negotiable for India, and it has rightly set for itself very ambitious climate goals. India’s rising energy demand, combined with its ambitious climate action goals, will translate into a huge spike in the country’s demand for green energy minerals.
Even in a modest climate action scenario, in the next 10 years, the world is looking at a 100 per cent spike in the demand for green energy minerals. In the ‘net zero emission by 2050 scenario’, the jump will be threefold.
The new global approach, calling for a drastic reduction in coal dependence, makes it even more imperative for India to speed up its green energy mission. India needs to be among the leaders in green energy production and related R&D activities.
India’s national interests dictate that it does not become part of any particular global power bloc and must continue to retain its strategic autonomy at all costs. High import dependency for ingredients of economic growth will adversely impact the country’s strategic autonomy. Atmanirbharta to the maximum extend possible and diversification of import sources as well as export markets, for goods and services, is the way ahead for India.
With such a scenario looming on the horizon, critical minerals seem far more critical for India than for the rest of the world. It is action time, and India needs to act fast.
India must enable private participation in mining in a big way. Mineral exploration holds the key to unlocking India’s deep-seated, high-value mineral resources. A well-thought-out and unambiguous policy for mining and critical minerals is extremely important. The policy must ensure consistency, transparency, a level-playing field, time-bound single window clearance, fast track courts and appropriate incentives in terms of tax benefits and mining concession rights.
India also needs to forge partnerships and joint ventures with friendly countries for upstream critical mineral resources as well as for downstream technologies to ensure a robust critical mineral supply chain. Recycling is another dimension with great potential that must be tapped.
The author is a former deputy chief of the Indian Army