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India’s Minerals Security Partnership to Secure Critical Mineral

Context:

As an effort to help the central public sector undertakings or PSUs to acquire critical mineral assets abroad, the Ministry of Mines in an US-led Minerals Security Partnership, proposed to circulate critical mineral block proposals received by partner countries with the PSUs.

Relevance:

GS III- Indian Economy

Dimensions of the Article:

  1. Details
  2. What are Critical Minerals?
  3. Why is this resource critical?
  4. What is China ‘threat’?
  5. What are countries around the world doing about it?

Details:

  • The initiative will help PSUs in the acquisition of critical mineral assets abroad. It involves circulating details of some block proposals received through the MSP.
  • PSUs such as Coal India Limited, NLC India Ltd, and NTPC Ltd, have expressed interest in securing lithium, cobalt, and graphite assets overseas.
  • About the MSP:
    • The MSP is a US-led collaborative effort involving thirteen countries including the UK, Australia, France, and Germany, and the European Union.
    • Aim:
      • It aims to catalyse public and private investment in critical mineral supply chains globally.
    • Functions: The collaboration is currently engaged in fostering a critical minerals and metals cooperation forum for
      • Sharing of expertise,
      • Building a robust battery materials supply chain, and
      • Jointly developing a minerals processing facility in South America.

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.
  • These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines.
  • 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 earths that are used for making magnets and silicon which is a key mineral for making computer chips and solar panels.
  • Aerospace, communications and defence industries also rely on several such minerals as they are used in manufacturing fighter jets, drones, radio sets and other critical equipment.

Why is this resource critical?

  • As countries around the world scale up their transition towards clean energy and 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.
  • But 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.
  • They are critical as the world is fast shifting from a fossil fuel-intensive to a mineral-intensive energy system.

What is China ‘threat’?

  • China is the world’s largest producer of 16 critical minerals.
  • China alone is responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.
  • 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.
  • It also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.
  • In 2010, China suspended rare earth exports to Japan for two months over a territorial dispute.

What are countries around the world doing about it?

  • US has shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.
  • 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”.
  • Australia’s Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.
  • The UK has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals.

-Source: The Indian Express


February 2024
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