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India to Capitalise on Coveted ‘Critical Minerals Club’ to Acquire Overseas Assets

  • February 15, 2024

India is actively fortifying its critical mineral supply chains through partnerships with western nations while refining its rare earths strategy. The mines ministry is reportedly pushing PSUs and their subsidiaries to expedite the acquisition of critical mineral assets abroad.

During a meeting held on October 30, 2023, the ministry additionally suggested that public sector undertakings (PSU) provide explicit financial directives to pertinent subsidiaries to accelerate the acquisition process. For this reason, the ministry has proposed to share with them proposals received by partner countries in the US-led Minerals Security Partnership (MSP), a coveted international club of countries dedicated towards securing critical mineral supply chains.

What is the ‘critical minerals club’?

Due to high demand and supply chain disruptions in global mineral markets, major players are forming strategic alliances and agreements to ensure reliable supplies. Geopolitical uncertainties, price increases, the Covid-19 pandemic, and the Russia-Ukraine conflict have all contributed to these disruptions.

The MSP involves 13 countries and the European Union working together to stimulate both public and private investment in global supply chains for critical minerals. Other than India, which joined in June 2023 during Prime Minister Narendra Modi’s state visit to the US, MSP partners include Australia, Canada, Finland, France, Germany, Italy, Japan, Norway, the Republic of Korea, Sweden, UK, US, and EU (represented by the European Commission).

Established in 2022, MSP aims to build reliable supply chains of critical minerals through collaboration between governments and industry to provide diplomatic and financial aid for strategic projects along the value chain – from mining, extraction and secondary recovery to processing, refining and ultimately recycling.

India seeks to leverage this MSP framework and aid Indian PSUs such as Coal India Limited, NLC India Ltd and NTPC Ltd, in the smooth and expedited acquisition of strategic critical mineral assets, including lithium, cobalt and graphite, overseas. While these PSUs have shown interest in acquiring lithium, cobalt and graphite assets abroad, the ministry of mines has promised to provide every possible help.

According to reports, additional secretary M Nagaraju of the ministry of coal – overseeing Coal India and NLC India – said in a meeting that the two PSUs are keen on acquiring critical mineral blocks abroad. They requested assistance from the ministry and KABIL, a central public sector enterprise under the mines ministry. KABIL, or the Khanij Bides India Limited, recently signed an agreement with a state-owned company in Argentina to explore and develop five lithium blocks in the South American country.

Coal India is pursuing the acquisition of lithium and cobalt blocks in Australia, and is also focusing on Chile, Bolivia and Argentina for securing critical mineral assets. NTPC, via its subsidiary NTPC Mining Ltd, is also eyeing overseas assets in lithium, cobalt, graphite and high-purity limestone.

Further, the mines ministry has advocated for engaging international consultants and staying in touch with Indian missions abroad to facilitate seamless acquisition of assets and projects.

Critical minerals crucial for Indian economy

Minerals play a crucial role in the worldwide economy and in the technologies driving the shift towards green energy. Establishing diverse, secure and sustainable supply chains for critical energy minerals is essential for deploying these technologies rapidly and extensively to address the climate crisis effectively.

Cobalt, graphite, lithium, manganese, nickel and rare earth elements are among the strategic mineral resources in high demand because of their critical applications in wind turbines, electric vehicle batteries and other key emerging technologies for the green transition.

India’s objective is to secure battery materials supply chains amid soaring ambitions to give way to a home-grown green energy transition and become a manufacturing behemoth in electronics, especially electric vehicles and semiconductors.

As India pushes for self-reliance in developing ‘clean energy’ technologies, increasing manufacturing output of items such as solar panels, wind turbines, batteries and EVs will create substantial demand for and reliance on a range of minerals in the coming years.

It is in this context that Indian PSUs and other industry players are vying for overseas assets related to critical minerals supply chains – whether it is mining operations or processing.

Forging deals on deals

In March 2023, the signing of the Critical Minerals Investment Partnership between India and Australia marked a significant achievement in their efforts to invest in critical minerals projects and establish supply chains between the two countries.

India’s private and public sector businesses have been signing deals around the world to source critical minerals including rare earths and secure supply chains from geopolitical turbulence.

India is eyeing such assets in South America, Africa and Australia. For instance, it has established collaborations with Chile, Argentina and Bolivia to secure lithium supplies, alongside conducting extensive surveys of its domestic lands for these resources and others.

The demand for lithium, a crucial element in batteries powering EVs, has surged in recent years as car manufacturers transition away from traditional combustion engine vehicles. India, which imports all major components required for lithium-ion cell manufacturing, incurred a significant import bill of Rs 23,171 crore in FY23, covering electric accumulators and separators. This figure marks a notable increase from the Rs 13,673.15 crore spent on lithium-ion imports in FY22.

Known as the “lithium triangle”, Chile, Bolivia and Argentina collectively possess nearly half of the world’s lithium resources, making them central players in the global supply chain for this essential metal. India is actively engaging with Chile and Bolivia to tap into lithium mining and secure sourcing of the mineral, crucial for the country’s transition to green mobility.

While a decision on acquiring blocks in Argentina is pending, the mines ministry is progressing with signing non-disclosure agreements with Chilean authorities. They aim to identify mines and blocks, explore prospecting opportunities, and facilitate downstream tie-ups in Bolivia. These tie-ups will involve facilitating investments by Indian companies in EV battery manufacturing and processing setups in Bolivia.

India’s fast growing economy is heading towards greater indigenous manufacturing and a green energy transition of colossal scale. To ensure the continuity of this trajectory and achieve its objective of self-reliance, it is seeking strategic assets overseas. These assets would position it advantageously within the global supply chains of critical minerals, which are increasingly becoming the cornerstone of the technology-driven world economy.

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