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What are Critical Minerals?

Context:

Twenty blocks of critical minerals are currently on auction for commercial mining by the private sector. The bidding process began on November 29, and bids can be submitted until January 22 next year.

Relevance:

GS III- Indian Economy

Dimensions of the Article:

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

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: Indian Express


 

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