India’s Reliance on China for Critical Minerals

Context

• In 2023, the Ministry of Mines identified 30 critical minerals essential for India’s economic development and national security.
• The report indicated that India is entirely dependent on imports for 10 of these critical minerals.
• However, it fell short of addressing a more urgent issue: the extent and nature of India’s dependency on China.

What are Critical Minerals?

• Critical minerals are mineral resources, both primary and processed, that are essential inputs in modern technologies, economies, and national security.
• They are characterized by the risk of supply chain disruption due to non-availability and price volatility.
• These minerals play a crucial role in various industries and sectors and have limited substitutes, making them of strategic importance.

China’s Dominance in Critical Minerals

• Resource Base and Investments:
  • China is the world’s largest mining nation with 173 types of minerals, including:
    • 13 energy minerals, 59 metallic minerals, and 95 non-metallic minerals.
  • In 2023, China invested $19.4 billion in exploration, discovering 132 new mineral deposits, including 34 large ones.
  • Key mineral reserves: copper, lead, zinc, nickel, cobalt, lithium, gallium, germanium, crystalline graphite, and others.
• Processing and Refining Capabilities:
  • Controls 87% of rare earth processing, 58% of lithium refining, and 68% of silicon processing.
  • Strategic overseas investments in mining and refining enhance supply chain control.

China’s Strategic Export Controls

• Weaponisation of Exports: Targets critical minerals vital for semiconductors, batteries, and high-tech manufacturing.
  • Example:
    • 2010 rare earth embargo against Japan.
    • 2023 restrictions on gallium, germanium, and antimony exports.
    • Ban on rare earth extraction and processing technologies in December 2023.
  • Strategic Balance: Avoids controlling minerals heavily reliant on Western raw materials.
    • Avoids actions disruptive to its domestic industrial and export-dependent sectors.

India’s Dependency on China

Critical Minerals Import Dependency (2019-2024)

• Bismuth (85.6%): Used in pharmaceuticals and chemicals; China controls 80% of global refinery production.
• Lithium (82%): Crucial for EV batteries; China refines 58% of global supply.
• Silicon (76%): Key for semiconductors and solar panels; advanced processing technology required.
• Titanium (50.6%): Vital for aerospace and defence; diversification exists but switching costs are high.
• Tellurium (48.8%): Used in solar power and thermoelectric devices; China produces 60% globally.
• Graphite (42.4%): Essential for EV batteries and steel production; China dominates 2% of global output, including battery-grade graphite.

Reasons for India’s Import Dependency

• Structural Challenges in Mining: Critical minerals are often deep-seated, requiring high-risk investments in exploration and mining technologies.
  • Lack of incentives and policy support has deterred private sector participation.
• Limited Processing Capabilities: India lacks advanced technological capacity for extraction and processing.
  • Example: Jammu and Kashmir’s lithium deposits (5.9 million tonnes) are in clay form, but India lacks the technology to extract them efficiently.

India’s Efforts to Reduce Dependency

• Strategic Initiatives:
  • KABIL (Khanij Bidesh India Ltd.): A joint venture of three State-owned companies to secure overseas mineral assets.
  • Membership in:
    • Minerals Security Partnership (MSP).
    • Critical Raw Materials Club for diversification and partnerships.
• Investments in Research: Collaboration with the Geological Survey of India (GSI) and the Council for Scientific and Industrial Research (CSIR) to develop indigenous technologies.
• Circular Economy and Recycling:
  • Promoting recycling to reduce dependency on virgin minerals.
  • Production-linked incentives for critical minerals extraction through recycling.

The Way Forward

• Sustained Investments: Addressing mining and processing challenges requires long-term commitment.
• Diversification: Expand partnerships to reduce reliance on Chinese supplies.
• Enhancing Indigenous Capabilities: Develop technological capacity for extraction and refining critical minerals.

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