India, US sign bilateral framework with Japan & Australia to end China's monopoly over critical minerals

New Delhi: India and the United States on Tuesday signed a bilateral framework, alongside a four-nation arrangement with Japan and Australia, to lessen dependence on China and challenge its near-monopoly on the processing, refining and supply of critical minerals essential for advanced technologies, clean energy and defence manufacturing.

A meeting of the foreign ministers of the Quad in New Delhi also saw India, Japan, Australia and the United States launch an Indo-Pacific Energy Security Initiative, in view of the disruptions caused by the conflict in West Asia in the global supply of oil, gas, and petrochemical products, as well as of essential goods and critical downstream derivatives, such as fertilizers, and implications of the crises in the Indo-Pacific region.

The four nations pledged to mobilise up to $20 billion in government and private sector support through new and existing efforts to strengthen critical minerals supply chains, including in mining, processing, and recycling.

The India-US framework for cooperation in critical minerals aims to deepen bilateral cooperation covering the entire critical minerals and rare earth supply chain, including mining, processing, recycling and related investment, External Affairs Minister S Jaishankar said as he and US Secretary of State Marco Rubio signed the bilateral pact.

“It will strengthen resilient and diversified supply chains, help us to collaborate and financing and with the effective management of critical minerals and rare earths.”

The vibrant innovation economies such as India and the US cannot afford to leave the foundational materials of key industries “vulnerable to single-source monopolies” that could deny the supply of critical minerals, “not just in a time of conflict, but as a leverage point contrary to sovereign national interests”, said Rubio.

New Delhi accepted an invitation from Washington, DC, earlier this year to join Pax Silica – a US-led strategic initiative to build a secure, prosperous, and innovation-driven silicon supply chain from critical minerals and energy inputs to advanced manufacturing, semiconductors, AI development, and logistics.

China's dominance of critical minerals and rare earths has become a growing concern for major economies. While it accounts for about 60 per cent of the global rare-earth production, China controls nearly 85-90 per cent of processing and refining capacity for many critical minerals, giving it an outsized role in supply chains that support semiconductors, electric vehicles, batteries, wind turbines, telecommunications equipment and advanced defence systems.

The export restrictions imposed by the Chinese Government on gallium, germanium, antimony and several rare-earth elements have heightened fears of supply disruptions and economic coercion.

The US has been heavily dependent on China for several strategic minerals and heavy rare earths used in defence and clean-energy technologies.

India, despite possessing sizeable reserves, imports about 90 per cent of its rare-earth magnets from China because of limited domestic processing and manufacturing capacity.

The Quad nations on Tuesday agreed to identify and support critical-mineral projects linked to member countries or markets, including through export credit agencies, development finance institutions and private investment.

They will deploy tools such as loans, guarantees, insurance, subsidies and commercial agreements, while exploring new mechanisms to mobilise capital and strengthen regional critical-mineral supply chains.

“The Quad is today taking forward a number of new initiatives, an energy security initiative, one of the – and of course our continued work on critical minerals, because we understand that secure and reliable supply chains are a precondition to economic and strategic stability,” Australian Foreign Minister Penny Wong said after the Quad meeting in New Delhi.

“We shared deep concern over the export restrictions of critical minerals and others,” said Toshimitsu Motegi, the foreign minister of Japan.