Critical Minerals: The Foundation of Strategic Power

04 Aug Critical Minerals: The Foundation of Strategic Power

Why in the News?

Critical minerals are increasingly important for India’s energy transition, defence, electronics, semiconductors and advanced manufacturing. Growing geopolitical tensions and concentrated global supply chains have made critical mineral security a strategic priority.

Importance of Critical Minerals

Critical minerals such as lithium, cobalt, nickel, graphite, copper and rare earth elements are essential for:

• Electric vehicles (EVs)
• Battery storage
• Renewable energy
• Semiconductors
• Defence technologies
• Advanced manufacturing
• Artificial Intelligence (AI) and electronics

Key concern: Critical mineral supply chains are highly concentrated, making them vulnerable to geopolitical disruptions.

Global Supply Chain Concentration

• The top three refining countries accounted for around 86% of the global market share for major critical minerals in 2024, up from around 82% in 2020.
• China is the leading refiner in 19 of 20 strategic minerals, with an average market share of around 70%.
• China dominates the processing of:
  • Rare earths – over 90%
  • Graphite – around 90%
  • Cobalt – around 75%
  • Lithium chemicals – around 70%

This makes critical minerals a matter of geopolitics and strategic security, rather than merely commercial resources.

Geopolitical Risks

Growing Demand

The clean-energy transition is highly mineral-intensive.

• Copper could face a potential 30% supply shortfall by 2035.
• Lithium demand is expected to create supply pressures by the 2030s.
• Demand for rare earths is expected to rise sharply due to:
  • Wind power
  • Electronics
  • Magnets
  • Advanced technologies

China’s Export Controls

China’s export controls on rare earths have raised concerns for sectors such as:

• Electric vehicles
• Defence
• Aerospace
• AI
• Semiconductors

Thus, countries are seeking to diversify supply chains and reduce excessive dependence on a single country.

India’s Critical Mineral Potential

India possesses significant domestic resources, including:

However, resource availability does not automatically guarantee supply security.

India remains dependent on imports for minerals such as lithium, cobalt and nickel, while China’s dominance in processing creates additional vulnerabilities.

India’s Major Challenges

1. Limited Exploration

India’s exploration of critical minerals remains relatively limited.

2. Regulatory Delays

Obtaining regulatory clearances can be time-consuming.

3. Processing Bottleneck

India has relatively limited capacity for high-purity processing and refining, despite having experience in bulk minerals.

4. Import Dependence

Domestic reserves have not translated into complete supply security.

5. Limited Private Participation

Private investment in exploration and remote-region projects remains challenging.

6. Recycling Constraints

Recycling can contribute to future mineral supply, but it cannot replace primary mineral supply in the near term due to limitations in collection, technology and feedstock availability.

India’s Policy Response

Since 2023, India has increasingly focused on building critical mineral security.

National Critical Mineral Mission

The government launched the National Critical Mineral Mission (NCMM) to strengthen the entire critical mineral value chain.

Key targets include:

• 1,200 domestic exploration projects by 2030–31
• Acquisition of at least 15 critical mineral assets overseas
• Encouraging Indian companies to secure foreign mineral resources
• Strengthening domestic processing and refining capabilities

Overseas Mineral Acquisition

Khanij Bidesh India Limited (KABIL) has secured 15,703 hectares in Argentina’s Catamarca province for lithium exploration.

Rare Earth Exploration

The 2026–27 Budget proposed rare-earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu.

India-US Cooperation

The India-US Critical Minerals and Rare Earths Framework, signed in May 2026, provides an additional avenue for supply-chain cooperation.

Way Forward

India needs to move beyond simply securing mineral reserves towards developing the entire value chain.

• Make processing and refining a national industrial priority.
• Improve geological data and exploration.
• Encourage private-sector investment.
• Develop strategic stockpiles of critical minerals.
• Strengthen domestic research and development.
• Promote recycling and urban mining.
• Diversify overseas mineral partnerships.
• Build trusted international supply-chain networks.
• Integrate recycling into long-term mineral security planning.

Significance for India

Secure critical mineral supplies are essential for India’s:

Energy transition → EVs → Renewable energy → Electronics → Semiconductors → Defence → Advanced manufacturing

Therefore, critical mineral security is closely linked with economic security, technological sovereignty and national security.

UPSC Prelims Practice Question

Q. With reference to critical minerals, consider the following statements:

1. Critical minerals are important for sectors such as electric vehicles, renewable energy, semiconductors and defence.
2. China has a dominant position in the processing of several critical minerals.
3. The availability of domestic mineral reserves automatically ensures complete supply-chain security.
4. Recycling can contribute to mineral security but cannot completely replace primary mineral supply in the near term.

Which of the statements given above are correct?

(a) 1, 2 and 4 only
(b) 1 and 3 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4

Answer: (a) 1, 2 and 4 only

Explanation

• Statement 1 – Correct: Critical minerals are essential for EVs, batteries, renewable energy, semiconductors, defence and advanced manufacturing.
• Statement 2 – Correct: China has a dominant role in processing several critical minerals, including rare earths and graphite.
• Statement 3 – Incorrect: Having mineral reserves does not guarantee supply security. Exploration, mining, processing, refining and supply-chain diversification are also necessary.
• Statement 4 – Correct: Recycling can supplement mineral supplies, but technological and feedstock limitations mean it cannot replace primary supply in the near term.

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Ayush Ranjan

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