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India’s Reliance on China for Critical Minerals
Context:
India is working to diversify supply sources and reduce its reliance on China for critical minerals to address vulnerabilities in sectors like electronics, energy, and defense, stemming from China’s dominance in reserves, processing, and refining.
Overview:
- In 2023, 30 critical minerals were identified as essential for India’s economic development and national security.
- India has complete import dependency for 10 of these minerals, with significant reliance on China for six key minerals.
- China’s dominance in mining and refining creates strategic vulnerabilities for India.
What are Critical Minerals?
- Critical minerals are essential raw materials for high-tech industries, including renewable energy technologies and defense.
- They are rare, difficult to substitute, and prone to supply chain disruptions due to limited global production and geopolitical risks.
- Their demand is growing, driven by the global transition to green energy and technological advancements.
China’s Dominance in Critical Minerals: Vast Resources: China discovered 173 types of minerals, including copper, lithium, cobalt, and rare earth elements.
- Processing Capabilities: China dominates global processing:
- Rare earths: 87%
- Lithium: 58%
- Silicon: 68%
- Strategic Investments: China invested $19.4 billion in exploration (2023), discovering 132 new mineral deposits, including 34 large ones.
- Global Investments: China has secured overseas mining projects and built robust refining capabilities, amplifying its global control.
China’s Export Control Strategy: China strategically restricts exports of critical minerals like gallium, germanium, and antimony.
- Examples:
- 2010 Rare Earth Embargo on Japan.
- 2023 Ban on Rare Earth Technology Exports to protect domestic interests.
- Export controls are calibrated to avoid disruptions to domestic industries and reliance on Western raw materials.
India’s Dependency on Chinese Imports: Import data (2019–2024) highlights high reliance on Chinese supplies for six critical minerals:
- Bismuth (85.6%): Used in pharmaceuticals; China controls 80% of global production.
- Lithium (82%): Vital for EV batteries; China refines 58% globally.
- Silicon (76%): Key for semiconductors and solar panels; processing technology is limited.
- Titanium (50.6%): Crucial for aerospace and defense; switching costs are high.
- Tellurium (48.8%): Used in solar power devices; China holds 60% of global output.
- Graphite (42.4%): Critical for EV batteries and steel; China produces 67.2% globally.
Why Does India Rely on Imports?
- Technological Barriers: India lacks the technology to process minerals like lithium from clay deposits despite significant reserves in Jammu & Kashmir (5.9 million tonnes).
- Investment Gaps: High-risk exploration requires incentives, deterring private sector participation.
- Policy Shortcomings: Lack of advanced mining technologies and insufficient policy support.
Significance of Dependency on China:
- Strategic Risks: Supply chain vulnerabilities during geopolitical tensions.
- Economic Impacts: Challenges in securing resources critical for renewable energy, electronics, and defense.
- China’s Control:
- Dominates mineral processing and refining (e.g., rare earths, lithium).
- Controls midstream refining for gallium, germanium, and other critical minerals.
India’s Strategy to Reduce Dependency:
- Securing Overseas Assets: Establishment of KABIL to acquire foreign mineral resources.
- Partnerships with Minerals Security Partnership and Critical Raw Materials Club for diversified sourcing.
- Building Domestic Capabilities: Research investments through Geological Survey of India and CSIR.
- Promoting recycling and circular economy practices.
- Offering production-linked incentives for recycling critical minerals.
- Policy Reforms and Investments: Encouraging private investments in high-risk mining projects.
- Developing technologies to process complex and deep-seated minerals.
- Strengthening Resilience: Enhancing alliances with strategic partners for secure supply chains.
- Promoting sustainable domestic mining practices.
