US Pushes for Diversification of Critical Mineral Supply Chains

Context:
The United States is urging G7 nations and allied economies to accelerate efforts to reduce dependence on China for critical minerals, citing strategic and supply chain vulnerabilities.

Key Highlights

Diplomatic Initiative

  • US Treasury Secretary Scott Bessent to push for urgent action at G7 meeting.
    • Participants include G7, EU, Australia, India, South Korea, Mexico.
    • Countries represent ~60% of global demand for critical minerals.
    • US–Australia agreement (October): $8.5 billion project pipeline.

China’s Dominance

  • Controls 47–87% of global refining and processing of:
  • Copper
  • Lithium
  • Cobalt
  • Graphite
  • Rare earth elements
    • Recent export restrictions on rare earths and magnets reported.

Strategic Importance of Critical Minerals

  • Essential for:
  • Semiconductors
  • Electric vehicle batteries
  • Renewable energy systems
  • Defense technologies
    • Central to energy transition and digital economy.

Global Supply Chain Response

  • Japan diversified after China’s 2010 export curbs.
    • Australia planning strategic reserve for rare earths & lithium.
    • US collaborating with Australia, Ukraine, and others to expand domestic production.

Relevant Prelims Points

  • Critical Minerals – Essential minerals facing supply risk and strategic importance.
    Rare Earth Elements (REEs) – 17 metallic elements used in electronics, magnets, defense systems.
    • G7 Members – USA, UK, Canada, France, Germany, Italy, Japan.
    • India launched Critical Minerals Mission (2023).
    • Minerals Security Partnership (MSP) – US-led initiative for mineral supply diversification.

Relevant Mains Points

  1. International Relations & Geopolitics
  • Mineral supply chains becoming instruments of geoeconomic statecraft.
    • Reflects intensifying US–China strategic rivalry.
    • Resource nationalism shaping global diplomacy.
  1. Economic Security
  • Overdependence on single supplier exposes nations to supply shocks and price volatility.
    • Diversification crucial for Atmanirbhar Bharat and India’s EV transition.
  1. Energy Transition & Climate Goals
  • Clean energy technologies require lithium, cobalt, rare earths.
    • Supply constraints may slow global decarbonisation.
  1. India’s Strategic Position
  • India part of demand coalition.
    • Possesses rare earth reserves but limited refining capacity.
    • Opportunity to become alternative hub with investment & policy support.

Way Forward

  • Promote diversified sourcing and strategic reserves.
    • Encourage domestic exploration and refining capacity.
    • Strengthen international mineral partnerships.
    • Develop recycling ecosystems for critical minerals.

UPSC Relevance

GS 2 – International Relations (Strategic Alliances, Geoeconomics)
GS 3 – Economy (Supply Chains, Energy Transition)
• Prelims: Rare earths, G7, Critical Minerals Mission

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