Critical minerals: Goals and gaps

The Union government’s National Critical Minerals Mission (NCMM), with a seven-year outlay of Rs 34,300 crore, is a step in the right direction in the country’s quest for mineral security. By targeting the entire value chain – from exploration and mining to processing, recycling, and international collaboration – the NCMM seeks to mitigate supply chain vulnerabilities exacerbated by geopolitical tensions and China’s dominance in critical minerals. While the mission’s holistic framework aligns with India’s climate commitments and industrial ambitions, its success hinges on addressing structural gaps in funding, technology, and private sector engagement.

The NCMM’s architecture rests on seven pillars: enhancing domestic production, securing overseas assets, promoting recycling, strengthening trade partnerships, advancing R&D, developing human capital, and mobilising financing. Domestically, it aims to auction over 100 critical mineral blocks and undertake 1,200 exploration projects by 2031, leveraging agencies like the Geological Survey of India which has already initiated 368 projects since 2022. Internationally, the mission empowers entities like Khanij Bidesh India Ltd (KABIL) to acquire foreign assets, exemplified by its lithium exploration agreement in Argentina’s Catamarca province. Recycling initiatives target 400 kilotonnes of materials through streamlined guidelines and incentive schemes, while R&D focuses on establishing three Centres of Excellence and filing 1,000 patents.

The mission’s governance framework, led by an Empowered Committee under the Cabinet Secretary, integrates inter-ministerial coordination and international alliances such as the Mineral Security Partnership and Quad’s clean energy supply chain principles. These efforts are bolstered by tariff reforms, including zero import duties on critical minerals to ease domestic availability.

The NCMM addresses long-standing gaps in India’s mineral policy. Historically, the sector suffered from under-exploration – only 10% of India’s Obvious Geological Potential (OGP) has been explored, compared to 20-25% in advanced economies. By fast-tracking regulatory approvals and introducing Exploration Licenses for private players, the mission could unlock resources like the 5.9 million tonnes of lithium reserves in Jammu & Kashmir. The emphasis on offshore mining, particularly for polymetallic nodules containing cobalt and nickel, diversifies supply sources beyond land-based reserves.

Internationally, India’s participation in the MSP and partnerships with resource-rich nations like Australia and Chile mitigates over-reliance on China, which currently controls 58-87 per cent of global processing for lithium, rare earth, and silicon. KABIL’s overseas ventures, though nascent, signal a strategic shift towards securing raw materials for renewables and EVs.

Despite its scope, the NCMM’s efficacy is constrained by three critical limitations: first, inadequate funding. Its Rs 34,300-crore outlay ($3.96 billion) pales against global benchmarks. The US Inflation Reduction Act allocates $369 billion for clean energy, while the EU’s Critical Raw Materials Act mandates €2 billion for mineral projects. The allocation of Rs 34,300 crore over seven years, which translates to an annual spending of about Rs 4,900 crore ($585 million), lags behind China’s $19.4 billion exploration investment in 2023 alone.

Second, India lacks advanced capabilities in extracting and processing minerals like lithium from clay deposits or recovering rare earths from e-waste. While the mission proposes R&D hubs, it omits concrete plans for technology transfer or collaboration with global leaders.

Third, the NCMM envisions 26 foreign mining projects by PSUs but offers limited incentives for private players. In contrast, countries like Canada and Japan provide tax rebates and risk-sharing mechanisms to attract private investors.

China’s dominance

As the world’s largest mining nation, China has discovered 173 types of minerals, including 13 energy minerals, 59 metallic minerals, and 95 non-metallic minerals. China’s dominance extends beyond reserves to include processing and refining, with control over 87% of rare earth processing, 58% of lithium refining, and 68% of silicon processing. Furthermore, China has strategically invested in overseas mining projects and built unparalleled midstream refining capabilities, raising supply chain vulnerabilities for countries including India, the US, and EU nations.

While the NCMM promotes recycling and stockpiling, it does not address intermediate processing – a domain where China controls 68% of silicon and 58% of lithium refining. Developing domestic refining capacities for battery-grade graphite or semiconductor-grade silicon must be prioritised to avoid bottlenecks.

The NCMM is a commendable first step towards securing India’s mineral future. However, in its current form, it risks being outpaced by the scale of global competition and technological disruption. By recalibrating funding, incentivising private capital, and prioritising processing innovation, India can transition from a reactive importer to a resilient player in the critical minerals landscape.

(The writer is a research analyst at the Takshashila Institution)