Critical Minerals: India needs a better Strategy
STORIES, ANALYSES, EXPERT VIEWS
On January 2, 2025, China’s Ministry of Commerce (MOFCOM) expanded its export control list by including 28 entities from the United States, effectively restricting their access to a swath of items classified under dual-use export controls. At the core of these restrictions lies minerals and rare and refined materials that are vital for high-technology applications such as in aerospace, semiconductors, batteries, and advanced electronics. Beijing’s list encompasses tungsten, gallium, magnesium, beryllium, hafnium, lithium-6 (isotope), and others — minerals with uses ranging from chip production to speciality alloys.
China has weaponised the exports of its critical minerals in an approach that is strategic and calculated. Beijing primarily targets minerals that are deemed to be critical by western nations and their allies, especially those essential for semiconductors, batteries, and high-tech manufacturing.
Challenges for India
Basically, write Rakshith Shetty (Research Analyst at the Takshashila Institution, Bengaluru) and Pranay Kotasthane (Deputy Director at the Takshashila Institution, Bengaluru) “the competition for critical minerals has become a fulcrum of international economic diplomacy…..”
India needs to be strategic and pro-active in its approach. Its push for critical minerals development “has faced stubborn challenges. In 2023, lithium deposits that were found in Jammu and Kashmir’s Reasi district made headlines, hinting at a game-changer moment for India’s energy transition. However, a little over a year later, the story remains lacklustre: no company has shown interest in bidding for these resources, and the block remains in limbo. Unfortunately, this is not an isolated incident.”
Government data show that only 48% (24 out of 49) of the mineral blocks available for auction in recent years have been auctioned.
Reforms have had no impact
This is despite, “over the last three years, the Union government has introduced measures to spur activity in critical minerals. The Ministry of Mines identified 30 critical minerals that are deemed essential for national security. And before that, the Union government set up a designated body, Khanij Bidesh India Ltd. (KABIL), which has been tasked with obtaining overseas investments in critical minerals such as lithium and cobalt……These reforms theoretically opened the door for greater private-sector investment and technology sharing.”
The government has also introduced ‘exploration license’, devised to attract specialised resource exploration agencies, including foreign companies, to survey potentially rich but geologically challenging deposits. Instead of having to commit to a full-scale mining operation that can take over a decade or more to turn profitable, these exploratory firms can now participate in reconnaissance and prospecting alone. The law also promises to reimburse 50% of the exploration expenditure once mining begins, aiming to de-risk early-stage operations.
Results have been tepid: Despite these promising reforms, the two authors state “the results have been tepid. Only a handful of exploration licences for minerals such as lithium, rare earth elements, and graphite have been cleared, and those mostly went to Indian public sector firms. Foreign participation is sparse, and further downstream, mining license auctions for critical minerals have largely stalled.”
