Critical minerals, the foundation of strategic power

GS-III: Economy | Science & Technology | Energy Security | Critical Minerals | Resource Security

Context

• Strategic importance of critical minerals: Critical minerals have become central to industrial strategy, clean energy transition and national security.
• Editorial’s argument: India must move beyond policy announcements and focus on execution by strengthening exploration, processing, refining and supply chain resilience to reduce strategic dependence.

Global Critical Mineral Scenario

• Foundation of emerging technologies: Lithium, cobalt, nickel, graphite, copper and rare earth elements are essential for electric vehicles (EVs), energy storage, renewable energy, semiconductors, defence and advanced manufacturing.
• Highly concentrated supply chains: The average market share of the top three refining countries for major critical minerals increased from 82% (2020) to 86% (2024).
• China’s dominance: China is the leading refiner in 19 of the 20 strategic minerals, with an average market share of about 70%.
• Concentrated production: Incremental global supply depends heavily on Indonesia (nickel) and China (cobalt, graphite and rare earths).
• Minerals as geopolitical assets: Critical minerals have become instruments of geopolitical influence rather than merely commercial commodities.

Geopolitical Risk and Global Response

• Rising demand: Clean energy transition is expected to increase demand for critical minerals beyond current production capacity.
• Copper supply concerns: The existing project pipeline indicates a potential 30% supply shortfall by 2035.
• Lithium outlook: While adequately supplied in the near term, lithium is expected to move into deficit during the 2030s.
• Rare earth demand: Demand is expected to rise significantly due to expanding wind energy, electronics and permanent magnet industries.
• China’s export controls: China’s 2025 rare earth export controls raised concerns across energy, defence, aerospace, AI, automotive and semiconductor sectors.
• European Union response: The EU Critical Raw Materials Act targets by 2030:
  • 10% domestic extraction
  • 40% domestic processing
  • 25% recycling
  • Maximum 65% dependence on any single country
• United States strategy: The U.S. is diversifying mineral supply chains through strategic partnerships.

India’s Position

• Growing mineral demand: Under a Net Zero pathway, India’s cumulative demand for critical energy transition minerals could reach 169 million tonnes by 2070, around 51% higher than under the current policy scenario.
• Domestic resource base: India possesses reserves of:
  • Cobalt: 44.9 million tonnes
  • Copper: 163.9 million tonnes
  • Graphite: 211.6 million tonnes
  • Nickel: 189 million tonnes
  • Monazite deposits containing rare earth oxides
• Potential of recycling: Recycling could eventually meet nearly 25% of copper and graphite demand by mid-century.
• Import dependence: India remains dependent on imports for lithium, cobalt and nickel, while Chinese dominance in processing creates supply vulnerabilities.
• Processing gap: The major challenge lies in inadequate domestic processing and refining capacity.

Structural Constraints

• Limited exploration: Mineral exploration remains relatively shallow.
• Regulatory delays: Time-consuming approvals delay mining projects.
• Limited private participation: Investment by private players remains constrained.
• Remote project economics: Mining in remote regions remains commercially challenging.
• Processing bottlenecks: India lacks sufficient high-purity processing facilities, while copper and graphite sectors face smelting, purification and scale limitations.
• Recycling limitations: Feedstock availability, collection systems and technology remain inadequate for large-scale recycling.

India’s Policy Response

• Identification of critical minerals: The Government has identified 30 critical minerals.
• National Critical Mineral Mission (NCMM):
  • 1,200 domestic exploration projects by 2030–31
  • Production of at least 15 critical minerals
  • Acquisition of 50 overseas mining assets by Indian companies
• Overseas resource acquisition: Khanij Bidesh India Limited (KABIL) has secured 15,703 hectares in Catamarca Province, Argentina for lithium exploration.
• Rare earth corridors: The Union Budget 2026–27 proposed rare earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu.
• International cooperation: The India–U.S. Critical Minerals and Rare Earths Framework (May 2026) aims to strengthen bilateral cooperation.

Editorial’s Suggestions

• Prioritise processing and refining: Make midstream mineral processing a national industrial priority.
• Improve investment climate: Provide better geological data, predictable regulatory approvals and risk-sharing mechanisms.
• Develop strategic stockpiles: Operationalise reserves of critical minerals to enhance supply security.
• Promote research and development: Accelerate applied R&D through industry partnerships.
• Strengthen domestic capabilities: Expand domestic processing capacity and diversify overseas sourcing through trusted partners.
• Comprehensive strategy: Establish mineral-specific risk thresholds, integrate recycling into supply planning, define measurable milestones and build a coordinated institutional framework.

Significance

• Energy transition: Critical minerals are essential for achieving India’s clean energy and Net Zero ambitions.
• Industrial growth: They support electronics, semiconductor manufacturing and advanced industries.
• National security: Reliable mineral supplies are crucial for defence manufacturing.
• Supply chain resilience: Domestic capabilities reduce strategic dependence on a few countries.

Challenges

• High import dependence for key critical minerals.
• Chinese dominance in global refining and processing.
• Limited domestic processing capacity.
• Slow exploration and regulatory bottlenecks.
• Weak recycling ecosystem.
• Increasing geopolitical risks affecting global mineral supply chains.

Way Forward

• Expand domestic exploration through faster project approvals and greater private sector participation.
• Develop processing and refining infrastructure to build complete value chains.
• Strengthen strategic partnerships for overseas mineral assets and diversified supply sources.
• Build strategic mineral reserves to reduce supply disruptions.
• Integrate recycling into long-term mineral security planning.
• Ensure effective implementation of the National Critical Mineral Mission through measurable milestones.

Conclusion

• From policy to implementation: India’s energy transition and industrial ambitions depend on secure access to critical minerals. Converting mineral potential into processing capability through sustained execution will be essential to reduce strategic vulnerability and strengthen long-term economic and national security.

UPSC Mains Practice Question

Q. Critical minerals have emerged as strategic resources in the era of clean energy transition and technological competition. Discuss India’s challenges in achieving critical mineral security and examine the measures needed to build resilient and diversified supply chains.