Today's Editorial

Today's Editorial - 10 August 2023

India Joined Minerals Security Partnership

Source: By Moushumi Das Gupta: The Print

Two key developments aimed at harnessing India’s critical minerals potential happened. First, India joined the Minerals Security Partnership (MSP), a US-led alliance of 14 developed countries. India is now the only developing country to become a part of the MSP, the elite critical minerals club set up in June 2022 to secure critical mineral supply chains. The second development that took place was India coming out with a comprehensive list of 30 critical minerals.

Even as the world is scrambling to secure critical minerals, the two moves, along with a slew of other proposed policy initiatives, could be a shot in the arm for India in ensuring self-reliance and addressing vulnerability in the supply chain of minerals.

India is dependent on China and other countries to meet its requirement of critical minerals including Rare Earth Elements (REE), which are the building blocks of modern day technologies. From aerospace to defence industry, electronics (mobile phones, laptops) to electric vehicles, solar panels, semiconductors, wind turbines, high-tech industries, telecommunications, security technologies — critical minerals and REE are used in many industries.   

They are called critical as their lack of availability or even concentration of existence, extraction or processing in few geographical locations may lead to supply chain vulnerability and disruption, threatening economic development and national security.  

Experts have termed India’s induction into the MSP “significant” as this is a group of countries with great technological capacities in geology and mining, mineral processing and metallurgy. India’s inclusion also gives the group, which has had developed countries as members till now, an international balance.

What MSP means for India

It was at the Prospectors and Developers Association of Canada convention, the largest mining event held in Toronto, Canada, that the US and its key partner countries — Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom, the United States, and the European Commission — announced setting up the Minerals Security Partnership. Italy joined the group in February this year.

According to a media note issued by the US Department of State on 14 June last year, the goal of the MSP is to “ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments”.

The note added that the MSP will help catalyse investment from governments and the private sector for strategic opportunities — across the full value chain — that adhere to the highest environmental, social, and governance standards.

It should enhance efforts for supply chain security, particularly because of China’s current dominance over mining, processing, and refining of many key critical minerals. China produces 60 per cent of the world’s rare earth elements. It has also become a dominant player in refining and processing critical minerals that it does not produce.

The Ministry of Mines said becoming an MSP member will help India engage with countries using advanced exploration and extraction technologies and learning from their experience. It will help us prepare our roadmap at a time China has been gradually building up its critical minerals dominance.

However, MSP is not the only global alliance that India has joined. With the government’s thrust on securing the critical minerals supply chain, India entered into a partnership with Australia in April this year, jointly investing $3 million each in five critical minerals exploration projects in Australia. Australia produces almost half of the world’s lithium is the second-largest producer of cobalt and the fourth-largest producer of rare earths elements.

Huge potential, not much work done

Rishabh Jain, senior programme lead, Council on Energy, Environment and Water (CEEW), a Delhi-based policy research institution, said though India has huge geological potential and it has not necessarily worked a lot on the exploration aspects of the mining supply chain. There are 14 companies, that are accredited for exploration in India but the challenge is in finding the minerals.

Even globally, many of the countries, including Congo, Australia, Chile, and Argentina, end up exporting or have historically exported these minerals from countries processing capabilities or with manufacturing raw material capabilities, said Jain, who leads the Market Intelligence vertical at the CEEW’s Centre for Energy Finance.

An April 2023 working paper “Assessing the Criticality of Minerals for India” released by Centre for Social and Economic Progress (CSEP), a public policy think tank working in the energy sector said critical minerals have complex global supply chains with a high concentration in the extracting and processing countries, resulting in high supply risks.

For example, China produces 60 percent of the world’s REEs and 34 percent of molybdenum. Around 69 percent of cobalt is mined in the Democratic Republic of Congo, with China having a majority in processing (65 percent) of the global mineral supply.

The paper added, “Australia produces 52 percent of the world’s lithium, with China being a major importer and processor of 58 percent of the global supply. South Africa mines 72 percent of the world’s platinum output.”

Low private sector engagement

One of the problems in India, when it comes to critical minerals, is minuscule private sector participation.

Rare earth permanent magnets are used in all electronic components. They are also used in electric vehicles since strong magnets are needed in the process to manufacture light electronic high-capacity motors.

India still has a long way to go when it comes to exploiting its huge geological potential for critical minerals. That is why getting into alliances like MSP, along with policy initiatives like coming out with a list of critical minerals and finalising a critical mineral policy is so crucial for India’s energy security.

Book A Free Counseling Session