Rare Minerals Race

Rare and critical minerals hold the key to a raft of new technologies: AI-powered devices, electric vehicles (EVs), automation, lithium batteries, chips, robotics, telecom and space satellites.

India has an estimated six per cent of global rare earth element (REE) deposits. China accounts for 90 per cent of REEs, complicating India’s strategy going forward. There are 17 rare earth minerals, most with exotic names but important technology uses: cerium, erbium, europium, etc.

According to the US Geological Survey, "Rare-earth elements (REE) are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions. Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems.”

India is accelerating its search for REEs. Last year the National Geophysical Research Institute (NGRI), based in Hyderabad, discovered 15 of the 17 known REEs at a site in the Anantapur district of Andhra Pradesh.

Apart from rare earth minerals, India has focused on critical minerals which have widespread use across technologies. Critical minerals include lithium, cobalt, graphite and nickel. China leads in processing these minerals but India is redoubling efforts to mine, process and produce them.

Lithium is a mineral of special interest for its use in batteries for EVs. Chile with 9.2 per cent of global lithium reserves, Australia (3.8 per cent) and Argentina (2.2 per cent) are countries India can tap. China accounts for only 1.5 per cent of global lithium reserves. However, it leads, along with Chile, in processing lithium.

India is considering a policy for critical mineral refinancing. As Mint reported, “Under the policy, the government may come up with an incentive scheme on the lines of the production linked incentive (PLI) scheme. The mines ministry has prepared the policy draft after finalising a list of 30 critical minerals that are required in a number of key sectors including battery storage, telecom and defence among others.”

In an interview with Mint, Western Australia’s deputy premier Rita Saffioti pointed out: “There is much interest in greater investments and collaborations between Indian and Australian firms in rare earths. The reforms are aimed at supporting projects that assist with decarbonisation. Western Australia has been in focus for its supply of key critical minerals including lithium, nickel and cobalt, as well as rare earth metals, which are used in smartphones, computers, batteries and electronics.” 

Australia accounts for around 50 per cent of global lithium and cobalt production and is among the top four producers in the world of rare earth minerals. Importing lithium from Australia will reduce India’s dependence on imports from China. Meanwhile, the discovery of 5.9 million tonnes of lithium reserves in Jammu and Kashmir (J&K) could be a gamechanger. The government has put 20 blocks of critical minerals up for auction. These include the lithium reserves found in J&K.

Reporting on the auction, Business Standard noted: “India initiated the process to auction 20 blocks of critical minerals, including the 5.9 million tonne lithium reserves discovered in Jammu & Kashmir’s Reasi district. Besides lithium, the critical minerals on offer are titanium, bauxite (aluminous laterite), glauconite, nickel, chromium, potash, copper, graphite, manganese ore, molybdenum ore, phosphorite, platinum group elements (PGE), and rare earth elements (REE). These are used in sectors like renewable energy, defence, and agriculture. Through an amendment to the Mines and Minerals (Development and Regulation) Act, 24 minerals were notified as critical and strategic, and the central government was given the power to grant mineral concessions for these through auction. The high demand for critical and strategic minerals is usually met by imports. The import bill is Rs 24,000 crore for lithium alone. Besides domestic firms, including battery manufacturers, international mining and other companies from South Korea and Japan have expressed interest in these blocks. The last date for bid submissions was January 22, 2024.”

Tapping Africa
 Geopolitics could play an important role in how countries access and process critical minerals. For example, the Democratic Republic of Congo (DRC) accounts for 70 per cent of global production of cobalt. It is part of the African Union (AU) whose membership of the G20 was facilitated by India. China, however, has a vice-like grip on processing, loosening only in recent months. It still processes and refines over 50 per cent of lithium and cobalt.

A paper released by the Confederation of Indian Industry (CII) charts out India’s strategy: “As with many challenges due to the unavailability of raw minerals and fierce global competition, particularly between China and the US to dominate the global raw material supply and battery value chain, India soon needs to build up a robust and continuous supply chain of minerals to achieve its domestic demand for advance chemistry batteries and to reduce its import-based dependency. Only a collaborative approach between the government and industry will allow India to conquer these challenges.

“Improved access to raw minerals can be provided in multiple ways, including reduction of import duties on raw minerals, improving bilateral ties with countries rich in the raw minerals, and encouraging Indian companies to acquire those resources. Providing incentives to local players to build refining capabilities, promoting sustainable domestic graphite mining with the relaxation of stringent regulatory restrictions, increasing import duties on cells and batteries, and incentivising the recycling of batteries can provide further impetus to localise cell manufacturing.”

India’s proactive moves to secure a regular supply of both rare earth and critical minerals is vital to the success of its green energy strategy in renewables, batteries, EVs and related technologies. In order to increase India’s annual economic growth rate from seven per cent to eight per cent, these technologies will play a critical role.