By
Lavkesh Balchandani
The shift towards clean energy is essential for India to meet its climate change commitments and reduce greenhouse gas emissions. However, this transition requires securing reliable and affordable supplies of critical minerals, which serve as building blocks for the manufacturing of renewable energy technologies. In this article, Renewable Watch reviews India’s approach towards critical minerals, analyses the demand and supply outlook for 2030, identifies vulnerabilities in the supply chain and offers recommendations to build resilient critical mineral supply chains…
India’s approach to critical minerals
In June 2022, India released a list of 30 critical minerals in order to develop robust value chains around them. At least 10 of the 30 identified critical minerals have 100 per cent import dependency. These include lithium, cobalt, nickel, niobium, tantalum, beryllium, germanium, rhenium, strontium and hafnium. Further, a recent analysis by the Council on Energy, Environment and Water (CEEW) reveals that only 15 countries globally possess 55 per cent or more reserves of key minerals like lithium, graphite, cobalt and nickel. This high concentration of production and reserves for critical minerals makes India vulnerable to potential supply disruptions.
To address these vulnerabilities, India has taken several policy measures. These include the establishment of the National Mineral Exploration Trust in 2015 to enhance domestic mineral exploration through a dedicated mineral fund. Multiple amendments were made to the Mines and Minerals Act in 2016, 2020 and 2021 to bring sectoral reforms. In 2023, the act was further amended to open up critical minerals exploration, which was earlier reserved for government entities, to private players. Khanij Bidesh India Limited was also established as a special purpose vehicle for the strategic overseas acquisition of critical minerals.Further, in 2022, India joined the Mineral Security Partnership to collaborate with resource-rich countries like the US, Canada and Australia, and engage in joint investments across critical mineral value chains. A new critical minerals policy is also being formulated, focused on developing complete domestic value chains. While these measures aim to achieve future supply security, India’s immediate mineral demand is likely to be met primarily through imports.
Demand and supply outlook for critical minerals
India’s demand for critical minerals, particularly lithium, nickel, cobalt, copper and rare earths, is set to rise exponentially, driven by electric mobility and renewable energy growth. The key factors contributing to this demand are:
Batteries: As part of the EV30@30 campaign, India has set a target of 30 per cent electric vehicle (EV) sales by 2030. Recent analysis by CEEW estimates the cumulative demand for lithium-ion batteries solely from electric mobility to reach 576 GWh by 2030. Further, India aims to install 500 GW of non-fossil fuel installed capacity by 2030. To address the challenge of balancing the grid with large shares of infirm solar and wind energy, India will need to deploy battery storage systems. The Ministry of Power plans to mandate the storage of 4 per cent of renewable energy generation by 2030, amounting to about 327 GWh of battery storage. The total battery storage demand from EVs and grid-related applications could potentially reach 903 GWh by 2030. Meeting even 60 per cent of this demand domestically would require nearly 100 GWh of cell manufacturing capacity.
Renewable energy: With the target of installing 140 GW of wind power by 2030, India could witness an annual demand of 16-31 kilotonnes for permanent magnets containing neodymium, dysprosium and praseodymium, according to the International Energy Agency (IEA). Meanwhile, to achieve 280 GW of solar power capacity, India may require 907-1,976 kilotonnes of copper and 66-249 kilotonnes of silver for manufacturing panels and grid connections during 2022-30.
Transmission infrastructure: Finally, expanding renewable energy capacity to 500 GW and electrifying transport will necessitate significant investments in grid infrastructure. During 2022-30, India might need 4.9-6.4 million km of extra transmission lines, which will drive copper demand.
On the supply side, India has large reserves of minerals such as mica, iron ore, bauxite and coal but lacks adequate reserves of most critical minerals. Even with increased domestic exploration and mining, India may have to import 50-60 per cent of its critical mineral requirement. For instance, India currently imports 95 per cent of its lithium requirement, 100 per cent cobalt and nickel, and 93 per cent of copper requirement.
Strategic pathways for enhancing mineral security
India has taken significant steps to ensure secure and reliable access to essential minerals. These efforts include participation in international alliances such as the Mineral Security Partnership, and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development. In addition, an investment of $143 million has been directed towards exploration through the National Mineral Exploration Trust (NMET Fund). The country has also implemented substantial reforms in the mining sector through legislative amendments and formulated a new critical minerals policy aimed at developing complete domestic value chains.
Additional policy measures being considered involve providing incentives for private companies to invest in domestic mineral exploration and mining projects. This involves the establishment of integrated processing hubs with necessary infrastructure such as roads, rail, water and power. India also aims to facilitate transparent and responsible sourcing from resource-rich countries through trade agreements. Other measures include establishing a strategic mineral stockpile mechanism to address short-term supply disruptions, easing taxes and tariffs on imported battery materials to mitigate price volatility, mandating recycling of lithium-ion batteries, and investing in research and development to develop mineral substitutes and material-efficient clean energy technologies. The country is also fostering international collaboration on standards for responsible sourcing, transparency in value chains and recycling technologies.
Despite these efforts, India’s reliable access to critical minerals is jeopardised due to various vulnerabilities in the supply chain. First, there is a geographic concentration of supply in a limited number of countries. For example, the Democratic Republic of Congo holds more than 70 per cent of global cobalt reserves, while Chile possesses 56 per cent of economically extractable lithium reserves, as reported by the US Geological Survey in 2022.
Further, the complex processing required for these minerals poses a challenge. Extensive processing, such as converting lithium ore to lithium carbonate before cathode powder manufacturing, is essential. Globally, processing technologies are controlled by a limited number of players. In addition, the prices of critical minerals are subject to volatility due to their commodity trading nature. In 2021, lithium and cobalt prices surged due to supply shortages, and nickel prices spiked in March 2022 following Russia’s invasion of Ukraine. The development of new mines is also hindered by long lead times, taking over 16 years from discovery to production. This extended timeline between investment and extraction delays the supply response to increased demand. Additionally, there is a decline in ore quality for minerals such as lithium and nickel after years of mining, resulting in increased energy and costs associated with extraction and processing. Extraction sites are also vulnerable to climate-related risks such as droughts, storms and floods.
Finally, geopolitical risks, such as export quotas, tariffs, or sanctions, can disrupt supply chains. In 2010, China’s restriction on rare earth exports significantly impacted industries in Western countries that depend on these materials for defense, electronics and automobiles.To effectively address these systemic vulnerabilities, India must go beyond enhancing domestic mining capabilities alone. Building a resilient supply chain requires a comprehensive approach that includes demand-side management, recycling, multilateral cooperation and transparency.
Recommendations for India
To ensure India’s secure access to critical minerals, several recommendations have been identified by the Indian Ministry of Mines and various think tanks in the country. An inter-ministerial body focused on critical minerals is being planned under NITI Aayog to coordinate planning and policy initiatives. In addition, it is advised to foster collaborations with resource-rich countries such as Australia, Chile, Indonesia and South Africa to explore joint investments across mineral value chains. Further, investments in advanced exploration technologies, including sensors, satellites and artificial intelligence, will be crucial for identifying domestic resources. To localise value chains, strategic partnerships among PSUs in mining, processing and manufacturing will have to be developed. Furthermore, allocating funds for research and development in material sciences is essential for the development of mineral substitutes and material-efficient designs along with amendments to public procurement policies mandating minimum recycled content in battery procurements.
To promote responsible and sustainable mining practices, guidelines and standards need to be developed. Exploring trade agreements that secure reliable access to imported minerals on predictable terms is crucial, along with the creation of mechanisms for sharing strategic stockpiles among ally nations during supply disruptions.
In conclusion, securing reliable access to essential minerals is pivotal for India’s clean energy transition and climate change objectives. While near-term demand may be met through imports, long-term mineral security requires diversifying both supply sources and technologies. Going forward, the overarching goal should be to build resilient supply chains capable of withstanding market volatility and geopolitical challenges through a combination of demand management, multilateral cooperation and circular economy practices.
The statistics presented above have been referenced from various publications by the Indian Ministry of Mines, the Central Electricity Authority, the IEA and CEEW.
