61.03 F
July 18, 2024
PI Global Investments

Key to self-sufficiency in strategic minerals: Developing indigenous sources and infrastructure

Earlier this year, the Ministry of Mines identified 30 critical and strategic minerals for India, including cobalt, copper, graphite, nickel, rare earth elements (REE) and lithium from the perspective of economic development and national security. Then, in October, it introduced royalty rates for lithium, niobium, and REE.
And recently, it rolled out auctions for 20 such mineral blocks for mining leases and composite licences. The latter involves a two-stage concession that includes a prospecting licence in the first stage, followed by mining lease in the second, subject to the concession-holder successfully completing exploration in the first stage.
The strategic push underlines the crucial role critical and strategic minerals are expected to play in the country’s economic development and national security. Globally, such minerals have also led the shift towards sustainable, low-carbon economies that support renewable energy technologies.
Indeed, the global quest for sustainable development has pushed up demand for these minerals. The market size of energy transition minerals — copper, lithium, nickel, cobalt and graphite — doubled over the past five years to a noteworthy $320 billion in 2022.
The global battery sector is experiencing a profound transformation as well, backed by the emergence of innovative technologies.
In 2022, global battery demand for clean energy applications expanded a remarkable 66%, with energy storage playing an increasingly significant role in the surge.
The growing preference for larger vehicles seen in conventional car markets is also being seen in the electric vehicles (EV) market, which is further pressurising critical mineral supply chains.
While global demand for these minerals is expected to grow further, it may give rise to issues of supply concentration and stemming from geopolitical uncertainties, which, fuelled by trade tensions and regional issues, can hamper market stability, especially considering China’s dominance in graphite, REE, cobalt and lithium, which could significantly influence global supply chains.
Meanwhile, demand for such minerals is expected to rise in India, too.
Domestic demand for lithium-ion batteries is already on the rise and is expected to grow further, at over 20% annually.
Demand for graphite is projected to grow at 8.3% annually, helped by the steelmaking industry, investments in renewable energy, and an expanding EV sector.
The nickel market is also poised for 6.5% annual growth, propelled by increased demand from the construction and automotive sectors and rising consumer electronics usage.
Further, current copper concentrate production covers just 4% of the requirement of copper smelters and refineries, significantly increasing their reliance on imports.
Likewise, imports of lithium, cobalt and nickel are also substantially high.
Such high import dependencies underscore the urgency of attaining self-sufficiency in terms of critical minerals to ensure economic stability and strategic autonomy.
The Indian Bureau of Mines has identified availability of domestic resources across cobalt, copper, graphite, nickel, platinum group elements, potash, REE, tin, titanium, and tungsten. Prioritising exploration for these can bolster India’s self-sufficiency and global standing.
The National Mineral Exploration Trust sanctioned 326 projects, collectively valued at Rs 2184.26 crore, to encourage regional and detailed exploration across the country. The fund needs to be utilised extensively to expand detailed exploration efforts for critical and strategic minerals to expedite development and maximise bidding participation, especially considering that bidders may be more interested in mineral assets explored in greater detail with the asset valued appropriately; the same can be factored in the auction premiums payable to the government.
The development of auctioned mineral blocks thus far has not been promising. Fast-tracking of environmental/ forest clearances and approvals for critical mineral exploration or mining projects could prove helpful in this area.
Another option is to auction blocks with pre-embedded clearances and approvals.
There is a possibility that even after successful auctions, critical mineral blocks may not be developed in time due to challenges arising in the recovery of minerals, high extraction and processing costs, and technological challenges faced by the end-use industry in using these minerals in their ready form.
Given the nascency of some of these technologies, it would be useful to provide specific financial incentives, create research and development (R&D) programmes, and undertake pilot projects to demonstrate technical and economic feasibility of critical and strategic mineral projects.
Several countries have undertaken initiatives and provide incentives for developing critical minerals.
The Canadian Critical Minerals Strategy covers investing in geoscience technologies, and exploration and mineral processing while supporting R&D and technological deployment. Additionally, Canada offers a 30% critical mineral exploration tax credit to incentivise exploration, production, and R&D on critical metals.
The Australian government established an AUD 2 billion Critical Minerals Facility to offer loan guarantees or preferential loans complementing private financing for projects pertaining to extracting or processing minerals for export.
The US, on its part, provides loan guarantees for projects increasing the supply of domestically produced critical minerals, and a grant programme for battery materials.
The common theme across these countries is their focus on promoting exploration, production, and innovation in this area.
In India, despite 100% foreign direct investment (FDI) being allowed in the mining and exploration sectors, the current FDI levels are not sufficient. There is a need to attract higher FDI and also junior mining companies to explore for critical and deep-seated minerals, by planning and organising specific stakeholder meetings/road shows, among other such initiatives.
Further, the International Energy Agency predicts that by 2040, recycling copper, lithium, nickel, and cobalt from spent batteries could reduce the primary supply requirements for these minerals by ~10%. Therefore, it becomes crucial to build recycling infrastructure for critical minerals, particularly from electronic waste and other end-of-life products.
Regulatory measures such as extended producer responsibility schemes encouraging manufacturers to consider the environmental implications of a product throughout its life cycle, from production to disposal, can be explored.
In conclusion, India needs the right policies and incentives as well as international cooperation to achieve self-sufficiency in critical minerals.
Satnam Singh is Senior Practice Leader & Director – Consulting, CRISIL Market Intelligence and Analytics.

Source link

Related posts

How Hiring Women Can Help America’s Infrastructure


Optimising AI, big data, infrastructure in low-cost virtual simulation – Digital Transformation News


The State of Ransomware in Critical Infrastructure 2024 – Sophos News


Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.