India’s Dependency on Critical Minerals and China

In recent years, India’s reliance on critical minerals has become a pressing concern. The Ministry of Mines identified 30 essential minerals crucial for economic growth and national security. Alarmingly, India is fully dependent on imports for ten of these minerals, with portion sourced from China. This dependency raises questions about national security and economic stability.

China’s Dominance in Critical Minerals

China is the world’s largest mining nation. It has discovered 173 types of minerals, including energy, metallic, and non-metallic minerals. The country holds nearly 40% of global reserves for key minerals. In 2023, China invested $19.4 billion in exploration, leading to the discovery of 132 new mineral deposits. Its control extends to processing, with China refining 87% of rare earth minerals and 58% of lithium. This dominance creates vulnerabilities for countries like India, the United States, and EU nations.

Export Controls and Strategic Calculations

China employs strategic export controls on critical minerals. It targets minerals vital for Western technology and manufacturing. However, China avoids disrupting its own industries and carefully balances its export restrictions. Notable instances include the 2010 rare earth embargo against Japan and recent bans on specific minerals. These actions show China’s calculated approach in leveraging its mineral resources.

India’s Vulnerability to Chinese Supplies

India’s import data reveals a heavy dependency on China for six critical minerals. Bismuth, lithium, silicon, titanium, tellurium, and graphite show dependency rates exceeding 40%. For instance, India relies on China for 85.6% of its bismuth, crucial for pharmaceuticals. Lithium, essential for electric vehicle batteries, faces processing bottlenecks due to China’s refining dominance. Silicon is vital for semiconductors, while titanium and tellurium are critical for aerospace and solar technologies, respectively.

Structural Challenges in India’s Mining Sector

Despite rich mineral resources, India faces challenges in mining and processing. Many critical minerals are located deep underground, requiring high-risk investments. The lack of adequate incentives deters private sector involvement. Additionally, India’s processing capabilities are limited. For instance, the country has lithium deposits in Jammu and Kashmir but lacks the technology for extraction.

Steps Towards Reducing Dependency

To address its dependency on China, India has initiated several strategies. The government established KABIL, a joint venture aimed at securing overseas mineral assets. India is also part of global initiatives like the Minerals Security Partnership. The country is investing in research and promoting recycling to lessen reliance on virgin minerals. Production-linked incentives for recycling critical minerals are also being explored. However, reducing dependency will require long-term investment and commitment.

Future Directions

India’s path forward involves diversifying supply sources and strengthening partnerships. The focus on research and development is essential for enhancing domestic capabilities. By investing in technology and promoting sustainable practices, India can work towards greater mineral security and reduced reliance on imports.

Questions for UPSC:

1. Critically analyse the implications of China’s dominance in the global critical minerals market.
2. What are the key factors contributing to India’s reliance on imported critical minerals? Discuss.
3. Estimate the potential impact of India’s initiatives to secure overseas mineral assets on its economy.
4. Point out the challenges faced by India in developing its mining and processing capabilities for critical minerals.

Answer Hints:

1. Critically analyse the implications of China’s dominance in the global critical minerals market.

1. China controls share of global reserves and processing, leading to supply chain vulnerabilities for countries reliant on these minerals.
2. China’s strategic investments in mining and refining create geopolitical leverage over nations like India, the U.S., and EU nations.
3. Export controls by China can disrupt global supply chains, affecting industries such as technology and renewable energy.
4. China’s dominance can stifle competition and innovation in the global minerals market, limiting alternatives for importing nations.
5. Dependence on China for critical minerals raises national security concerns for countries like India, necessitating urgent policy responses.

2. What are the key factors contributing to India’s reliance on imported critical minerals? Discuss.

1. India’s mineral resources are often located deep underground, requiring investment and advanced technology for extraction.
2. Lack of adequate incentives for private sector participation hampers domestic mining and processing capabilities.
3. Processing technologies for critical minerals are limited in India, leading to reliance on foreign refining, particularly from China.
4. India has identified several minerals as critical, yet it has not developed sufficient infrastructure to support local production.
5. Market dynamics and the high costs associated with developing domestic sources contribute to India’s import dependency.

3. Estimate the potential impact of India’s initiatives to secure overseas mineral assets on its economy.

1. Securing overseas assets can reduce import dependency, enhancing national security and economic stability.
2. Access to diverse mineral sources can lower costs and improve supply chain resilience for critical industries.
3. Investment in overseas projects may lead to job creation and technological advancements within India’s mining sector.
4. Strengthening international partnerships can attract foreign investment and expertise, benefiting local economies.
5. Long-term access to critical minerals can support India’s ambitions in sectors like renewable energy and electric vehicles.

4. Point out the challenges faced by India in developing its mining and processing capabilities for critical minerals.

1. High-risk investments are necessary for exploring deep-seated mineral deposits, deterring private sector involvement.
2. Limited technological expertise and processing infrastructure hinder the extraction and refining of critical minerals.
3. Regulatory and policy challenges create an uncertain environment for investment in the mining sector.
4. Environmental concerns and community opposition can delay mining projects, impacting timelines and costs.
5. Insufficient research and development in mining technologies restricts India’s ability to innovate and compete globally.