Economic Survey 2025-26: Critical minerals seen as new 'chokepoints' in global energy transition

New Delhi: The global energy transition is no longer driven just by technology but increasingly limited by control over critical minerals, with metals like copper and rare earth elements emerging as "strategic chokepoints" that shape low-carbon economies, energy security and geopolitical influence amid export curbs by key supplier nations, the Economic Survey said on Thursday.

Copper prices have turned highly volatile due to mine disruptions in Indonesia, Congo and Chile, fuelling fears of medium- to long-term supply shortfalls against surging demand from power grids and data centres worldwide, compounded by protectionist trade barriers, the Economic Survey 2025-26 said.

"Metals like lithium, cobalt, nickel, copper, and rare earth elements have become the new strategic chokepoints in shaping the contours of a low-carbon economy, influencing energy security, industrial competitiveness, and geopolitical power, as observed through several trade restrictions on export of critical minerals by source countries," it said.

As demand accelerates, advanced economies are responding by promoting standards-based critical mineral markets, emphasising sustainability, traceability, and governance. Initiatives such as the G7 Roadmap to Promote Standards-Based Markets for Critical Minerals aim to enhance transparency, reduce concentration risks, andencourage responsible sourcing.

However, implementing digital traceability systems, meeting certification requirements, and enhancing environment, social and governance (ESG) compliance can entail substantial costs.

While these objectives are legitimate, standards are not neutral technical tools. They are instruments of market power. Their design will determine who can enter supply chains, who captures value, and who bearstransition costs.

From the perspective of developing countries, the current direction presents three significant challenges.

Firstly, there's a risk that standards could turn into barriers instead of facilitating progress. With the introduction of digital traceability systems, certification requirements, and ESG compliance, the upfront costs and ongoing expenses can be quite steep.

For many resource-rich developing nations, these financial burdens may lead to investor pessimism, and slow down project development, and limit supply. This is especially concerning as the world urgently needs these countries to ramp uptheir efforts in response to global transitions.

Second, there is a real concern that standards, if narrowly defined or asymmetrically enforced, can trap developing countries in the lowest-value segments of supply chains, exporting raw materials while concentrating value-added processing and manufacturing in advanced economies.

Third, affordability is adversely impacted. Sustainability premiums that tend to raise mineral prices without parallel support for finance, technology, and capacity building will increase costs to transitioning globally and disproportionately impact emerging economies.

A transition that is clean but unaffordable is neither rapid nor just. A durable global framework for critical minerals must therefore move beyond compliance-centric thinking. It must be inclusive, capacity-sensitive, and development-oriented.

Resource-rich regions in Africa, Latin America, and Asia must be treated as co-producers of value, rather than merely sources of raw materials. This requires careful deliberation on aspects of international cooperation on technology transfer, skills, institutions, and investment in mining, processing, and recycling.

India’s strategy reflects this balance with a focus on domestic capabilities through the National Critical Mineral Mission along with suitable incentive mechanism, while engaging in international partnerships like the Minerals Security Partnership and theIndo-Pacific Economic Framework. India consistently demonstrates that there is a complementarity between strategic autonomy and global integration. PTI SID SID MR