India’s reliance on China for critical minerals?
How is China a dominant player in critical minerals. Let us Understand ?
China’s unparalleled dominance in critical minerals stems from its vast resource base and strategic investments across the value chain. As the world’s largest mining nation, China has discovered 173 types of minerals, including 13 energy minerals, 59 metallic minerals, and 95 non-metallic minerals.
Reserves of nearly 40% of these minerals, particularly copper, lead, zinc, nickel, cobalt, lithium, gallium, germanium, and crystalline graphite, increased significantly last year, supported by an exploration investment of $19.4 billion.
China’s dominance extends beyond reserves to include processing and refining, with control over 87% of rare earth processing, 58% of lithium refining, and 68% of silicon processing.
How does China control the world with these minerals and makes it run according to its tunes?
Beijing primarily targets minerals deemed critical by Western nations and their allies, especially those essential for semiconductors, batteries, and high-tech manufacturing. However, China carefully balances these decisions against two constraining factors:
it avoids controlling minerals which heavily depend on Western raw material imports, and it refrains from actions that could disrupt its domestic industrial enterprises or export-dependent sectors.
This strategic calculus was evident in China’s 2010 rare earth embargo against Japan, its recent restrictions on antimony, gallium, and germanium exports, and its December 2023 ban on rare earth extraction and processing technologies.
How is India Dependent on China and which are these metals ?
An in-depth examination of import data of 30 critical minerals spanning 2019 to 2024 reveals India’s acute vulnerability to Chinese supplies, particularly for six critical minerals where dependency exceeds 40%: bismuth (85.6%), lithium (82%), silicon (76%), titanium (50.6%), tellurium (48.8%), and graphite (42.4%).
Use of various metals and Industry it is related to :-
Bismuth, primarily used in pharmaceuticals and chemicals, has few alternative sources, with China maintaining an estimated 80% of global refinery production.
Lithium, crucial for EV batteries and energy storage, faces processing bottlenecks, despite alternative raw material sources, as China controls 58% of global refining
Silicon, vital for semiconductors and solar panels, requires sophisticated processing technology that few countries possess.
Titanium, essential for aerospace and defence applications, has diversified sources but involves high switching costs.
Tellurium, important for solar power and thermoelectric devices, is dominated by China’s 60% global production share and finally graphite, indispensable for EV batteries and steel production, faces supply constraints as China controls 67.2% of global output, including battery-grade material.
Why does India Rely On Imports ?
What would India do to overcome such constraints?
India has initiated a multi-pronged approach to reduce its dependency on China. The government has established KABIL, a joint venture of three State-owned companies, to secure overseas mineral assets. India has also joined strategic initiatives like the Minerals Security Partnership and the Critical Raw Materials Club to diversify its supply sources and strengthen partnerships. The country is also investing in research through institutions like the Geological Survey of India and the Council for Scientific and Industrial Research (CSIR) while promoting recycling and circular economy practices to reduce virgin mineral dependency.
Production-linked incentives for extracting critical minerals through recycling also seem promising. However, transitioning away from China will require sustained investment and long-term commitment to these various initiatives.
What is KABIL and what countries are we targeting through it ?
KABIL is exploring opportunities for acquisition of overseas critical minerals assets in Argentina, Australia and Chile. (CAA for mnemonics)
A joint venture company namely Khanij Bidesh India Ltd. (KABIL) has been incorporated with the equity contribution from three Central Public Sector Enterprises namely, National Aluminium Company Ltd NALCO, Hindustan Copper Ltd and Mineral Exploration and Consultancy Ltd with the objective to identify, explore, acquire, develop, mine, process, procure and sell strategic minerals abroad to secure resilient supply of these minerals to Indian domestic industry. To achieve its objectives, KABIL is presently exploring opportunities for acquisition of overseas critical minerals assets like Lithium (Li) and Cobalt (Co) and taking initiatives in projects in Argentina, Australia and Chile.
In Argentina, KABIL has signed an Exploration and Development contract with the State-owned company of Argentina and has obtained exclusivity rights for exploration and development of lithium blocks in the Catamarca Province of Argentina. KABIL has started activities for obtaining statutory clearances and other activities, required for starting exploration activities.
In Australia, KABIL has signed a Memorandum of Understanding (MoU) with Critical Mineral Office (CMO), Department of Industry, Science and Resources (DISER), Govt. of Australia for carrying out joint due diligence and further investment in Li & Co mining assets of Australia. It will also help KABIL in taking long term investment decisions and off take arrangement to ensure sustainable supply of lithium and cobalt to the Country. KABIL has also signed an NDA agreement with a State-owned company of Chile, ENAMI to take up exploration of brine type lithium block in Chile. KABIL is continuously endeavoring to explore possibilities in other countries having rich potential of critical and strategic minerals, for long term investment.
CIL has also submitted its expression of interest against RFI floated by Govt. of Chile for the development of projects for the exploration, extraction and processing of lithium contained salts or other types of deposits in Chile. CIL has signed non-disclosure agreements with companies from different countries for checking feasibility of potential investment in the critical mineral projects.
The Minerals Security Partnership (MSP) aims to accelerate the development of diverse and sustainable critical energy minerals supply chains through working with host governments and industry to facilitate targeted financial and diplomatic support for strategic projects along the value chain. MSP partners include Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom, the United States, and the European Union. MSP partners strive to elevate environmental, social, and governance (ESG) standards across the global minerals sector. The MSP commits to support only those projects that meet high, internationally recognized ESG standards, promote local value addition, and uplift communities, in recognition that all countries can benefit from the global clean energy transition. Projects supported by the MSP will adhere to rigorous ESG standards throughout the project lifetime.
