Context
The Union Cabinet’s new ₹7,200 crore rare earth magnet scheme highlights India’s urgent need to strengthen its critical minerals value chain, especially in the areas of processing, refining, and advanced manufacturing. While India has reformed its mining laws and boosted exploration, it still lacks large-scale processing capacity, undermining its ambitions in clean energy, electronics, defence, and advanced technologies.
Key Highlights
India’s Critical Minerals Gap
- India produces several critical minerals (copper, graphite, silicon, zirconium, rare earths) but lacks processing and refining capacity.
- Most of the value addition—refining, converting ores into high-purity materials—occurs abroad.
- This makes India dependent on imports for battery-grade materials, magnets, solar components, and semiconductors.
- Global supply is highly concentrated; China controls >80% of global processing and has repeatedly weaponised supply chains (e.g., export restrictions).
Reforms and Progress So Far
- Amendments to the Mines and Minerals (Development and Regulation) Act support:
- Domestic mining
- Exploration licenses
- Auction of critical mineral blocks
- However, India still imports almost the entire amount of lithium, nickel, and cobalt required for energy transition technologies.
- Rising demand from EVs, solar manufacturing, telecom, defence and electronics makes domestic processing crucial.
Need for Midstream Capabilities
- The biggest gap in India’s mineral chain lies in midstream processing & refining.
- Without this, minerals mined in India or imported cannot be converted to high-value materials.
- Economic Survey shows India has minerals but lacks refining scale to compete globally.
Strategic Actions Suggested
- Develop Critical Mineral Centres of Excellence
- Create specialised national research centres.
- Deepen applied research in processing, refining, high-purity compounds.
- Modelled after U.S. and European frameworks.
- Incubate Midstream Industries
- Develop commercial-scale refining technologies with CSR funds.
- Focus on high-demand sectors such as:
- EV batteries
- Solar wafers
- Magnets
- Defence materials
- Resource Security & Recycling
- Promote secondary mineral recovery: recycling scrap metals, old batteries, e-waste.
- India generates 250 million tonnes of mineral-rich waste annually.
- Helps reduce imports and mitigates resource risks.
- Upskilling Workforce
- Create specialised training for hydrometallurgy, mineral chemistry, and rare earth separation.
- The ₹100 crore skilling allocation under the NCGM may support this.
- Increase Investment & Global Partnerships
- Invite private investment into refining technologies.
- Build partnerships with mineral-rich countries in Africa, Australia, Latin America.
- Strengthen geo-economic diplomacy in critical minerals.
Relevant Prelims Points
Critical Minerals Definition
- Minerals essential for economic development and national security but with supply chain risks due to:
- Low availability
- Geopolitical concentration
- Processing bottlenecks
India’s Key Critical Minerals
- Lithium, cobalt, nickel, rare earth elements (REE), graphite, copper, tin, zirconium.
National Mineral Exploration Trust (NMET)
- Funds mineral exploration in India.
Mines and Minerals (Development and Regulation) Act, 1957
- Governs mining leases, auctions, exploration norms.
Value Chain Segments
- Upstream: Mining, extraction
- Midstream: Processing, refining (India’s weakest link)
- Downstream: Manufacturing components (batteries, magnets, semiconductors)
Why Midstream Matters
- Major value addition happens during refining and chemical conversion.
- Determines a country’s strategic autonomy in future technologies.
Relevant Mains Points
Strategic Importance
- Critical minerals are essential for:
- Energy transition (solar, wind, batteries)
- Defence systems
- Electronics & telecom
- EV manufacturing
- Without midstream processing, India risks import dependency, undermining industrial competitiveness.
Challenges
- Limited refining technologies.
- High capital costs.
- Environmental concerns in chemical processing.
- Insufficient R&D collaboration.
- Global domination by select countries (especially China).
Economic & Security Implications
- Import dependency increases vulnerability to:
- Price shocks
- Supply disruptions
- Geopolitical coercion
- Developing domestic refining capabilities will enhance:
- Industrial growth
- Job creation
- National security
Way Forward
- Build cluster-based processing hubs near mineral belts.
- Incentivise private sector investment through PLI-like schemes.
- Forge bilateral critical mineral partnerships.
- Implement circular economy approaches—urban mining, recycling.
- Integrate critical minerals strategy with India’s net-zero goals and Atmanirbhar Bharat.