The Government of India recently made a significant step forward in the Mining sector. They announced their first-ever auction of critical minerals, making it available to the Private Sector for purchase. This initiative offers 20 blocks for sale, marking a substantial change in the industry.
Key Features of the First Critical Minerals Auction
A landmark in this event, this is the inaugural occasion that mining rights related to lithium ore are being auctioned to private sectors. Other noteworthy minerals within the blocks comprise nickel, copper, molybdenum, and rare earth elements (REEs). Spanning across eight states, Tamil Nadu holds most of the mineral blocks (seven). Rights assigned to these blocks differ; four blocks are auctioned for Mining Licences (ML), granting immediate mining operations, while the rest of the 16 blocks are bid for Composite Licences (CL), allowing for geological exploration prior to mining.
Background of the First Auction of Critical Minerals
This ongoing auction was set into motion following the government’s categorization of 30 minerals as “critical”. This declaration was coupled with amendments to mining laws. In July 2023, the government identified 30 minerals as Critical Minerals by amending the Mines and Minerals (Development and Regulation) Act, 1957. This amendment granted the Central Government authority to auction blocks of these classified minerals. Post this auction, the Geological Survey of India (GSI) is projected to commence the exploration of critical mineral reserves nationwide.
What are Critical Minerals?
Critical minerals are paramount for economic development and national security. The lack of these minerals or concentration of extraction in specified geographical locations may result in potential vulnerabilities in supply chains and supply disruption. Countries worldwide have their unique lists of critical minerals based on individual circumstances and priorities, with the U.S declaring 50 minerals critical, Japan has identified 31, the UK considers 18, EU (34) and Canada (31).
Significance of Critical Minerals for India
Critical minerals hold significance in numerous industries such as high-tech electronics, telecommunications, transport, defense, and green technologies. These minerals are integral to the transition towards clean energy, ensuring India’s progress towards its green objectives. With India’s significant domestic demand and potential growth in these sectors, these minerals can give rise to job creation, income generation, and innovation.
Challenges for India Regarding Critical Minerals
India faces challenges in managing critical minerals. The ongoing Russia-Ukraine conflict significantly impacts the supply chains of these critical minerals. India also grapples with limited domestic reserves of certain critical minerals like lithium, cobalt, and other rare earth elements. This reliance on imports can create potential vulnerability in aspects such as price fluctuations, geopolitical factors, and supply disruptions.
International Cooperation and Strategic Management
India can seize this opportunity to strengthen its international cooperation and strategic management of critical minerals. Participating in initiatives such as the Mineral Security Partnership (MSP) spearheaded by the United States, India can play a critical role in establishing global critical mineral supply chains. Bilateral agreements with countries like Australia, Canada, Japan, and South Africa can further enhance India’s position in the exploration, development, processing, and trade of critical minerals.
