Critical minerals are elements that are fundamental to modern technologies but often face supply chain disruptions. Recently, India and Australia decided to collaborate in the field of projects and supply chains for critical minerals. Australia has pledged USD 5.8 million to the three-year India-Australia Critical Minerals Investment Partnership.
Understanding Critical Minerals
Critical minerals include graphite, lithium, cobalt and rare earths, which are vital components in the production of electric vehicle (EV) batteries, magnets, computer chips and solar panels. In 2016, the Department of Science and Technology in India, with the Council on Energy, Environment and Water, drafted a Critical Minerals Strategy identifying 49 key minerals required for India’s future economic growth.
The Importance of Critical Minerals
These minerals are utilised extensively in the creation of mobile phones, computers, batteries, EVs, and green technologies such as solar panels and wind turbines. The aerospace, communications, and defence industries also employ these minerals in the production of fighter jets, drones, radio sets, and other crucial equipment.
Why Are These Minerals Critical?
The significance of these minerals is underscored by the increasing global transition towards clean energy and a digital economy. These resources are integral to the ecosystem fuelling this change, and any supply shock could severely endanger a country’s economy and strategic autonomy. Supply risks exist due to rare availability, growing demand and complex processing value chain. Plus, the global demand for these critical minerals is predicted to increase by 400-600% over the next several decades.
Significance of India-Australia Partnership
India’s relationship with Australia aims to lower emissions and meet growing demands for critical minerals in India’s space and defense industry, as well as the manufacture of solar panels, batteries, and electric vehicles. This partnership expands global trade, advances critical minerals projects in Australia and diversifies global supply chains.
India-Australia Trade Relations
India and Australia enjoy excellent bilateral relations characterised by shared values of pluralistic, parliamentary democracies. They initiated the India-Australia Comprehensive Strategic Partnership during the India-Australia Leaders’ Virtual Summit held in June 2020. The bilateral trade for both merchandise and services was valued at USD 27.5 billion in 2021.
The China Factor
China’s dominance in the production and refinement of critical minerals is a potential threat as it leaves other nations somewhat reliant on China for these essential resources. Having control over vast mineral reserves and processing capabilities, China can potentially influence global supply chains.
International Responses to the Issue
Countries such as the US, UK, and Canada have conducted reviews of their critical minerals supply chains and taken steps to diversify their sources. India has established the Khanij Bidesh India Limited (KABIL), a joint venture of three public sector companies, to ensure a steady supply of critical and strategic minerals. Similarly, the United Kingdom unveiled its new Critical Minerals Intelligence Centre in 2022 to study future demand and supply.