Intro: Did you know that critical minerals are crucial for India's green growth and economic stability? Discover the vital role of critical minerals in India's green growth with insights from Dr Rajesh Chadha, Senior Fellow, CSEP and former Professor and Research Director, NCAER. Learn how these resources impact industries, the significance of the National Mineral Policy 2019, and innovative strategies for e-waste recycling. In an exclusive interaction between Dr Chadha and Senior Journalist Mahima Sharma, explore India's quest to diversify critical mineral sources and harness the potential of lithium reserves for a sustainable, self-reliant future.

MS: For the understanding of our readers, please share what critical minerals are and how these are essential in India's green growth. Also, which critical minerals do you believe India should prioritize, and how can the country improve their production and utilization?

RC: Critical minerals play a vital role in a country's economy, both in their raw and processed forms. These minerals are essential for various industries and processes, but there's a concern that their availability could be disrupted, leading to potential shortages or high prices. A recent report from CSEP (name of the organization) has evaluated 43 selected minerals in India to determine their criticality. This assessment considers factors like economic importance and supply risks.

The report identifies several minerals, including antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium, as crucial for India. These minerals are important for green technologies, advanced equipment, aviation, and national defence manufacturing. Despite India's significant geological potential for minerals, many of these essential resources are not easily accessible. Therefore, it's important for India to develop a strategic plan to ensure a reliable supply of critical minerals. This strategy should focus on the minerals highlighted as critical in the CSEP report, aiming to build robust supply chains that can withstand potential disruptions.

MS: How is the National Mineral Policy 2019 contributing to the Indian economy? What's your take on analysis about the same?

RC: The National Mineral Policy of 2019 outlines a roadmap for India's future policies to boost the production of non-fuel minerals. It aims to achieve a twofold increase in the value of Mineral Conservation and Development Rules (2017) minerals within seven years while cutting the trade deficit in the minerals sector by half over the same period.

The policy intends to drive economic growth through exploration, extraction, and management of minerals, contributing to domestic industries and reducing reliance on imports. It promises a regulatory framework that facilitates ease of doing business with streamlined and time-bound clearance procedures. It also ensures secure tenures and the ability to transfer concessions.

Regulation will be carried out by the Indian Bureau of Mines (IBM) and State Directorates of Mining and Geology, utilizing e-governance and IT-enabled monitoring across the mining process. The policy suggests the possibility of auctioning mineral blocks with pre-embedded clearances. Although, it is essential for the government to also explore alternative, fair, objective and transparent allocation methods.

In this context, there's a call for the government to incentivize private companies to engage in exploration and allocate leases with pre-embedded clearances. This approach could pave the way for India's more dynamic and efficient mineral sector.

MS: India's vast amount of electronic waste remains largely unrecycled. How can the country improve end-of-life mineral recycling to recover valuable resources and reduce import reliance?

RC: Electronic waste, or e-waste, is a valuable resource pool containing various reusable materials like base metals, precious metals, and rare earth elements. Interestingly, India stands as the world's third-largest contributor to e-waste, churning out 3.3 million tonnes in 2019, even amidst the staggering global figure of 53.6 million tonnes. Encouraging e-waste recycling could stabilise the market and ensure a reliable domestic source of Critical Raw Materials (CRMs). This move would contribute to energy conservation and environmental preservation by lessening the demand for new mining activities.

Presently, however, India grapples with low recycling rates, though there have been some achievements in recycling lead, copper, and nickel. The informal sector largely manages e-waste in the country. To truly harness the potential of this urban mine, India needs to intensify efforts towards sustainable e-waste supply and material recovery.

In 2011, the Ministry of Environment, Forest and Climate Change (MoEF&CC) introduced the concept of Extended Producer Responsibility (EPR), placing the onus on electronics manufacturers to handle the disposal of their products at their end-of-life, both financially and practically. Expanding upon this, in 2016, the EPR rules evolved to establish a Producer Responsibility Organisation (PRO), aimed at facilitating the collection and recycling of e-waste. The scope of EPR was broadened to incorporate buy-back, deposit refund, and exchange initiatives.

Signs of a more serious commitment to enhancing e-waste recycling in India emerge from the Draft National Resource Efficiency Policy 2019. This policy envisions securing material supply and reducing reliance on imports of essential materials by embracing circular economy strategies. By aligning with such a policy, India could chart a course towards more substantial e-waste recycling efforts.

MS: The supply of critical minerals is concentrated in a few countries, leading to potential supply chain bottlenecks. How can India diversify its sources of critical minerals to reduce dependency on specific nations and mitigate risks?

RC: Critical minerals play a crucial role in global industries, but their supply chains are intricate and risky due to their heavy concentration in certain extracting and processing nations. For instance, China produces a significant portion of the world's rare earth elements (60%) and molybdenum (34%). The Democratic Republic of Congo accounts for about 69% of global cobalt mining, while China dominates the processing sector (65%) for these minerals. Australia is a major player in lithium production, contributing 52% to the world's total, and China takes the lead in processing 58% of the global supply.

Given this scenario, India must ensure a secure supply of critical minerals. A recent development is India's participation in the Minerals Security Partnership led by the United States. To enhance this effort, it's suggested that a G20 Critical Minerals Security Partnership should be established. India has taken steps in the right direction through KABIL, a collaborative company involving three public sector enterprises. KABIL has made progress in commercializing overseas mineral blocks, partnering with countries like Argentina and Australia. Similarly, the Minerals Security Partnership has engaged with Argentina to explore potential project investments and support.

To create a more resilient supply chain, India needs to formulate a national strategy for critical minerals. This strategy should be comprehensive, considering the list of critical minerals and employing various approaches. Access to raw mineral resources is vital for achieving India's and the world's net-zero ambitions. While there may be obstacles to achieving these goals, mineral security shouldn't be one of them.

MS: How can new lithium reserve discoveries be a game changer to boost the Indian economy and ensure a greener future?

RC: The recent discovery of lithium in India brings promising prospects for the country's future self-sufficiency. However, several important steps need to be taken to turn this resource into a fully operational mine.

To begin with, a comprehensive exploration of the lithium deposit is necessary, and this process could take a considerable amount of time, potentially spanning months or even years, depending on the complexity of the deposit. The government has expressed its intention to auction the mineral block in the near future. This move would likely grant the winning company a Composite Licence enabling exploration and mining activities.

Subsequent phases, such as further exploration, the development of a mining plan, and the acquisition of necessary clearances, could extend over five years or more. Various factors, including engineering requirements and local considerations, would influence these timelines. Consequently, while the lithium deposit was uncovered in 2023, it might not yield tangible results until around 2030.

To facilitate this process, the government can play a role in expediting the allocation of the mineral block and ensuring timely clearances.

In the interim, as additional exploration efforts continue, India must strategize its position within the downstream lithium value chain. China has established a robust domestic lithium processing industry, benefiting from its integration into a larger supply chain, economies of scale, and years of experience. For India to effectively compete in this market, significant investments and cultivating additional expertise would be essential, possibly through strategic partnerships like those with Australia.

Environmental and social considerations are paramount when establishing mining and processing operations. For instance, lithium processing is water-intensive, and waste disposal could pose air, water, and land contamination risks, impacting the well-being of local communities.

Simultaneously, India might explore acquiring foreign assets within the lithium supply chain. By considering these factors and providing enhanced incentives for the exploration sector, India can harness its natural resources to achieve self-sufficiency in meeting its climate change mitigation goals.

MS: Given the list of 30 critical minerals announced by the Ministry of Mines, how do you propose incentivizing domestic exploration of these minerals to ensure India's long-term goal of reaching net zero by 2070?

RC: In the current setup, private companies can engage in exploration activities through a Composite License (CL). These licenses cover areas where there isn't enough evidence of the mineral presence and allow the license holder to conduct both exploration and mining. Instead of introducing an entirely new license for exploration, it might be more effective to adjust the existing CL system to boost the exploration of deep-seated minerals.

For regions where the minerals' existence is unknown, a few changes could be made:

• Interested parties could participate in bids for CLs, prospective leaseholders would be determined based on the share of the mineral value they would pay to the state government upon successful discovery and mining.
• The scope of the proposed CL could be broadened to include reconnaissance, which means exploration companies could be granted a larger maximum area for their activities.
• The reconnaissance portion of the CL might cover an area of up to 1000 square kilometres. Safeguards could be established to ensure companies actively conduct exploration, such as requiring periodic reports on their progress.
• After three years of reconnaissance, the license holder could be expected to give up 75% of the original area.

Implementing these suggestions would enable exploration companies to sell or mine any uncovered resources. This approach could provide a more effective framework for encouraging mineral exploration and utilization by private entities.

MS: Your reports and article have always mentioned the need for a multipronged strategy to optimize the critical minerals supply chain. What would be the key components of such a strategy? How must India balance economic, environmental, and social aspects in its implementation?

RC: India needs a well-thought-out plan for critical minerals aimed at making the country self-reliant in essential minerals crucial for sustainable economic growth and eco-friendly technologies. This strategy would play a vital role in areas like climate action, national defence, and safeguarding the interests of communities and regions. It's equally important for India to actively collaborate with other countries through various agreements to establish robust and secure supply chains for these critical minerals.

To stay up-to-date with changing global and local conditions, it's recommended that the assessment of critical minerals be revised every three years. This practice followed worldwide, should be adopted by India as well, starting with the minerals listed in this study. We can better anticipate potential supply chain vulnerabilities by projecting the country's future requirements for these vital minerals.

A national strategy focused on critical minerals, based on the findings of the CSEP study, will help us prioritize addressing concerns related to supply risks, domestic policies, and sustainability.

The study's findings lead to several policy suggestions. To ensure a consistent supply of critical minerals, we should increase our efforts in domestic mineral exploration and extraction while securing reliable sources abroad. Reducing the risks associated with importing critical minerals can be achieved through developing resilient supply chains, establishing trade agreements, and even acquiring mining assets in other countries.

MS: In light of the challenges private exploration companies face, how would you balance encouraging exploration investments and mitigating risks, particularly in cases of mineral exploration with high risks and huge investments?

RC: India has made notable strides in securing its critical mineral supply chains. The Australia-India Economic Cooperation Trade Agreement of 2022 is a significant development which eliminates tariffs on key critical minerals like zirconium, titanium, cobalt, and nickel. This move is aimed at boosting accessibility to these crucial resources. Another initiative is the establishment of KABIL, a governmental effort to ensure a steady stream of critical and strategic minerals. KABIL (Khanij Bidesh India Ltd.) is a joint venture between three public companies: NALCO, HCL, and MECL. KABIL operates through government-to-government negotiations and the acquisition of mining assets internationally. It's worth noting that KABIL is actively exploring lithium extraction projects in Argentina.

While these steps are essential, the private sector also plays a role in securing critical mineral supply chains. India needs to ponder its position within the downstream critical mineral value chains. A prime example is China, which has developed a domestic lithium processing industry. This success is attributed to being part of a comprehensive supply chain, capitalizing on economies of scale, and gaining years of experience. To compete in this arena, India would need significant investments and the acquisition of additional skills. Collaborative efforts with strategic partners, such as Australia, could be beneficial.

However, weighing the environmental and social implications of mining and processing operations is essential. For instance, lithium processing demands substantial amounts of water. It can result in waste streams that may pollute the air, water, or land, leading to adverse health effects on local communities.

Simultaneously, India could explore owning foreign assets within critical mineral supply chains. This move would further solidify the country's position in securing these essential resources. India's approach involves a combination of international partnerships, domestic development, and careful consideration of potential impacts to ensure a resilient and sustainable critical mineral supply chain.

About Dr. Rajesh Chadha

Rajesh Chadha, a Senior Fellow at CSEP, holds a PhD in Economics from the Indian Institute of Technology, New Delhi. Formerly, he was a Professor & Research Director at the National Council of Applied Economic Research (NCAER), and, prior to that an Associate Professor of Economics at Hindu College, University of Delhi. His expertise spans international trade, focusing on regional and multilateral aspects. He is also well-versed in foreign direct investment, agricultural markets, and non-fuel minerals & mining in India. He has been a Visiting Scholar at renowned universities like Michigan, Melbourne, and Monash and a Visiting Faculty at esteemed academic and research institutes in India. Rajesh Chadha was designated a GTAP Research Fellow (2004-2007) by Purdue University's Global Trade Analysis Project.

About the Interviewer

Mahima Sharma is a Senior Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in the allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Since March 2022, she is also an Entrepreneurship Education Mentor at Women Will - An Entrepreneurship Program by Google in Collaboration with SHEROES. Mahima can be reached at media@indiastat.com

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