Chinese Weaponisation of Critical Mineral 

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Chinese Weaponisation of Critical Mineral 

Context:

On August 15, 2024, China imposed export restrictions on antimony, a critical mineral for defence and strategic sectors, continuing a trend of similar restrictions that began in mid-2023.

 

Critical Mineral Market Overview

  • Global market: $320 billion (doubled in last 5 years), driven by clean energy tech demand.
  • China’s dominance: Controls 60% of rare earth production, 60% of critical minerals, and 80% of processing worldwide.

 

Examples of China’s Weaponisation of Rare Earths

  • 2010 Japan Incident: China halted rare earth exports after a collision between a Chinese trawler and Japanese boats.
  • Mid-2023 Restrictions: China imposed export restrictions on gallium and germanium in response to U.S. export controls.
  • Netherlands Response: China limited the supply of critical minerals like graphite after the Netherlands restricted semiconductor equipment exports.
  • Retaliation to U.S. Export Controls on Advanced Technology: When the U.S. imposed tighter controls on advanced computing, semiconductors, and related equipment, China responded by curbing exports of synthetic and natural graphite.
  • Other Examples:
      • Zimbabwe: Banned unprocessed lithium exports.
      • Indonesia: Restricted nickel exports.
      • Chile: Moves to nationalise lithium industry.

 

Reasons for Weaponisation 

  • Strategic Dependency Reminder: China highlights the West’s reliance on Chinese-controlled mineral supply chains.
  • Supply Chain Sabotage: Disrupting Western access to critical minerals hampers technology development.
  • Targeting Military Hardware: Minerals like rare earth elements are essential for military applications such as submarines and fighter jets.
  • Shift to Coercion: China’s foreign policy is becoming more retaliatory as relations with the West deteriorate.

 

Impact on India

  • India is heavily dependent on imports of critical minerals, with an import cost of ₹34,000 crore in FY23.
  • Domestic mining may increase, raising environmental and social concerns.

 

Steps Taken by India

  • Critical Mineral Mission: Focuses on domestic production, recycling, and overseas acquisitions.
  • Legislative Changes: Mines and Minerals (Development and Regulation) Amendment Bill, 2023 enables private sector exploration.
  • Overseas Acquisitions: KABIL, a joint venture of public sector firms, signed its first lithium mining deal in Argentina in January 2024.
  • Customs Duty Exemptions: In the Union Budget 2024-25, customs duties on 25 critical minerals were removed to promote domestic manufacturing and reduce import dependency

 

Challenges in Reducing Dependency

  • Complex Supply Chains: Diversifying supply chains requires significant investment and expertise.
  • Processing Bottleneck: China remains a dominant processor of critical minerals, even if mined elsewhere.

 

Global Response

  • Diversification of Reserves: New critical mineral deposits are being discovered in Indonesia, Argentina, Australia, and Sweden.
  • Substitutes and New Technologies: Alternatives like sodium-ion batteries and cobalt-free EVs are emerging.
  • Recycling: By 2040, over 50% of Europe’s lithium demand could be met through recycling.

 

China’s Strategic Use of Antimony

  • China controls half of the world’s antimony production, critical for military, electronics, and energy sectors.
  • Export restrictions on antimony will disrupt global supply chains, reinforcing China’s dominance.

 

Global Cooperation

  • Countries like the U.S. and India are forming alliances and developing domestic capabilities to counter China’s mineral control.
  • Partnerships with resource-rich nations like Australia and Canada aim to diversify supply chains.

 

Way Forward

  • Decentralisation of Reserves: Efforts to develop alternative sources of critical minerals are underway globally.
  • New Extraction Methods: Technologies like Direct Lithium Extraction (DLE) aim to increase production and sustainability.
  • Strategic Stockpiling: Countries are increasing reserves of critical minerals to buffer against future supply disruptions.
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