Critical Minerals 

16 Oct Critical Minerals 

This article covers “Daily Current Affairs” and the topic details “Critical Minerals”. This topic has relevance in the “Economy” section of the UPSC CSE exam.

For Prelims:

What are critical minerals? 

For Mains:

GS3:  Economy

What is the significance of Critical Minerals? 

Why in the news?

The Union Cabinet has approved changes to the MMDR Act 1957 to set competitive royalty rates for mining critical minerals such as lithium, niobium, and rare earth elements (REEs).

What are Critical Minerals?

• A mineral is considered critical when the potential risk of supply shortage could substantially impact the economy more than other raw materials. 

Risk of Supply Shortage + Impact on Economy= Critical Mineral 

• These minerals play a vital role in both economic development and national security. Thus, their scarcity or concentration in specific geographic regions can create vulnerabilities in the supply chain.
• Minerals like lithium, graphite, cobalt, titanium, and rare earth elements are crucial for advancing various sectors, including high-tech electronics, telecommunications, transportation, and defence. 
• They are integral components in strategic value chains, including clean technologies like zero-emission vehicles and renewable energy technologies, information and communication technologies, and advanced manufacturing materials used in defence applications, permanent magnets, and ceramics.

Identification of Critical Minerals by the Indian Government: 

• Why the Identification Matters?

• • • The Indian government’s recognition of 30 minerals as critical is driven by international commitments to reduce carbon emissions and transition to a net-zero energy landscape. 
    • An expert team appointed by the Ministry of Mines prepared a report on critical minerals to establish this identification, which will undergo periodic reviews.

• The Three-Stage Identification Process:

• • The identification process involved three stages. 
    • Examination of the strategies of countries like Australia, the USA, Canada, the UK, Japan, and South Korea resulted in a list of 69 critical elements and minerals. 
    • Consultations with various ministries to identify minerals critical to their respective sectors. 
    • Creating an empirical formula to evaluate mineral criticality, considering economic importance and supply risk. 
  • Following this process, 30 minerals were identified as most critical for India.

Significance of the Critical Minerals:

• Economic Development: 
  • Critical minerals are crucial for various industries, including clean energy, defence, and electronics. 
  • Developing these resources boosts India’s domestic economy and reduces import dependence.
• National Security: 
  • Critical minerals, like cobalt for lithium-ion batteries, impact national security. 
  • A secure supply reduces vulnerability to supply disruptions and protects India’s interests.
• Sustainable Development: 
  • Critical minerals, such as lithium in electric vehicle batteries, promote sustainable development by curbing emissions. 
  • Utilising these resources accelerates India’s shift to a cleaner energy economy.

About the Recent Amendment: 

• Under the MMDR Act, the Second Schedule sets royalty rates for various minerals. 
• Currently, Item No. 55 in this schedule specifies a 12% royalty rate based on the average sale price (ASP) for minerals not explicitly listed. This rate significantly exceeds international standards.
• The new royalty rates are as follows:
  • Lithium: 3% of the London Metal Exchange price,
  • Niobium: 3% of the Average Sale Price (both primary and secondary sources),
  • REE: 1% of the Average Sale Price of Rare Earth Oxide, the most common source of REE.

Sources: pib.gov.in/PressReleaseIframePage.aspx?PRID=1966595 

Download plutus ias current affairs eng med 16th Oct 2023

Q1. With reference to Critical Minerals, consider the following statements: 

1. They are critical for economic development and energy security. 
2. They are primarily used for thermal power generation, fertilisers, and agriculture. 

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2 

(d) None 

Check Answer

Q2. Consider the following :

1. Niobium is used to strengthen alloys such as stainless steel. 
2. China leads the global production of the rare earth metals.
3. Major reserves of Niobium are located in the Niobium Triangle – Argentina, Bolivia, and Chile. 

How many of the abovementioned statements are correct?

(a) Only one 

(b) Only two 

(c) All three 

(d) None

Check Answer

Q3. Discuss the significance of critical minerals. What steps is the Indian government taking to develop its domestic mineral resources?

rishabh