Incentives, investments in tech, infra must for developing India's critical mineral sector: GTRI

New Delhi: Measures such as fiscal incentives, investments in technology and infrastructure, mining operations abroad and a conducive regulatory environment are a must for developing India's critical mineral sector, a report by think tank GTRI said on Monday.

The Global Trade Research Initiative (GTRI) said in its report that India is focusing on developing its critical mineral sector as it is vital for high-tech and renewable energy technologies.

At present, India depends on imports, particularly from countries like China, Congo, Chile, Indonesia, South Africa, Argentina, Vietnam, the US, Canada and Australia.

Critical minerals such as lithium, chromium, cobalt, antimony, arsenic, barite, beryllium, bismuth, caesium, fluorspar, gallium, germanium, graphite, hafnium, and others are indispensable for modern technologies.

They are integral to the manufacturing of various high-tech applications, including mobile phones, flat-screen monitors, wind turbines, electric vehicles (EVs), solar panels, drones, jet engines, satellites, and pacemakers.

These are termed critical minerals as any supply disruptions due to scarcity, political tensions, or other factors that may adversely affect the security and economy of a country, it said.

Despite having significant reserves of rare earth elements and other critical minerals, India lacks commercial production capability, mainly due to the absence of domestic processing facilities, it said, adding this results in high import dependency for these minerals.

"As the world continues to transition towards green technologies, the importance of these minerals and the geopolitics surrounding them will only increase. The world is already witnessing critical mineral supply gaps," GTRI Founder Ajay Srivastava said.

He said that there is an increase in demand for critical minerals, leading to supply-demand deficits and price volatility and this situation could adversely affect a vast array of industries, hinder clean energy transition and affect energy security.

The report suggested the government identify critical minerals and support the growth of processing industries by measures such as providing subsidies to processing industries, support for research and development, and the establishment of favourable trade policies to secure raw materials from other countries.

There is a need for the development of refining facilities, research centres dedicated to improving processing techniques, and logistics networks to efficiently transport raw materials and finished products.

"Such investments will give India a technological and infrastructural edge in the processing of critical minerals," it said.

It also said that India must work to integrate itself into the global supply chains for critical minerals and this will involve forming strategic partnerships and investing in mining operations abroad to secure a steady supply of raw materials.

"By doing so, India would ensure that it has the necessary inputs for its processing industries, even if it does not produce many of the raw minerals domestically," it said.

The suggestions also include a focus on the export of value-added products like lithium carbonate and finished goods (such as batteries, magnets, and other high-tech components) and not the raw minerals.

"Create a regulatory environment conducive to the growth of the processing industry. This includes streamlined permitting processes for new facilities, regulations that encourage domestic processing of critical minerals, and policies designed to attract foreign investment in the sector," the report said.

Lithium and cobalt are essential for lithium-ion batteries found in electronics and electric vehicles; graphite is used in battery production and as a lubricant; gallium and germanium are critical for electronics and solar panels; and rare earth elements are crucial for the production of magnets used in wind turbines, EVs, and various defence applications.

The major players in the refining business include China, Japan, the US and certain European nations.

According to the report, China refines 60 per cent of the world's lithium and 80 per cent of the world's cobalt, essential for lithium-ion batteries.

"China's control extends beyond mining; it has significant stakes in mining operations across the globe, including in Congo, Chile, and Australia, thereby securing its future supplies," it added.

Srivastava said that India has significant reserves of critical minerals such as rare earth elements (REEs), titanium, and thorium.

However, commercial production is often hindered by high exploration and extraction costs or the lack of domestic processing capabilities, he said.

"Despite holding the world's third-largest deposits of titanium minerals and fifth-largest reserves of REEs, India lacks commercial-scale technology for value addition. This leads to a dependency on imports for these critical materials," he said.

He added that India has identified 30 critical minerals that are deemed essential for the country's self-reliance, technological advancement, and economic growth.