India needs public sector to ensure security of critical minerals supply

PCPS statement and press release

Date: 25.11.23

 

India needs public sector to ensure security of critical minerals supply

Executive Summary:

• India should be launching a program of independent or indigenous innovation and not become a domestic source of supply of critical minerals for the US and her allies through the Indo-Pacific Economic Framework.
• Far-reaching amendments were rushed to the Mines & Minerals (Development & Regulation Act (MMDRA) to allow private companies to mine six atomic minerals.
• Adequate precaution may be exercised to see that the private entities entering the hitherto forbidden mining business shall not plunder the area for profit motives
• Most of these mineral deposits are in hill tracts and around the natural habitats of adivasis and local tribes. Government shall ensure that they would respect the laws in force, and evaluate the adverse impacts of mining before proceeding to entrust mining leases to companies.
• MOM ought to have held a prior consultation with the National Commission for the Scheduled Tribes (NCST) and there should have been adequate discussion in the Parliament
• Exploration and development of all critical minerals needs to be designated as a strategic R&D activity in which public sector should be given commanding heights to keep up with the developments taking place at the global level.
• The foreign direct investment in critical minerals sector is a matter of serious concern for the PCPS. The PCPS demands a revisiting of the policy regime. Indian Parliamentarians must immediately set up a joint select committee with members from Lok Sabha and Rajya Sabha at the earliest possible.
• For copper and other such critical minerals with large domestic reserves and high economic importance, India will need to deploy an approach of ramping up the exploration and production by augmenting the existing capacity.
• It is high time that the concerned Ministry reviews its policy of exporting iron ore, strengthen the CPSE steel companies such as RINL as stated in the national policy on steel and provide them captive iron ore blocks of their own and take such measures as necessary to conserve the mineral
• Government should review the decision to open up beach sand mining access for nuclear minerals for private mining.
• The country has immense waste streams of multiple products discarded every year which contain recoverable quantities of critical minerals like spent catalysts, e-waste, discarded automobiles, mud from metal extraction and so on.
• It will be crucial to explore intergovernmental partnership through bilateral and plurilateral arrangements  with key mineral producing countries
• MOM must review and enlarge the list of critical minerals to take into account their criticality not only from domestic point of view but also from global point of view.
• The Mineral Security Partnership with the US appear to be an asymmetric technology collaboration arrangement which may sub serve USA’s interests more than India’s. It Ought to be reviewed.
• Khanij Bidesh India Ltd. should build up a diversified portfolio of overseas mineral sources to minimize asymmetric exposure risk.

Introduction

The Peoples Commission on Public Sector and Public Services (PCPS) expresses its dismay at the way the Government of India is going about the opening up and liberalizing Critical Minerals Sector to attract private investments and technology. The concerns of PCPS also revolve around the bilateral agreements and plurilateral agreements in making in the area of critical minerals. The Union Government is hastening bilateral collaboration with the United States and the EU. India is a member of the US led Mineral Security Partnership of 13 countries and the EU which intends to promote investment in critical minerals supply chain globally. India is also aspiring to join the Critical Materials Club organized by EU. While the idea is to gain access to advanced exploration and extraction technologies and ensure hassle free supplies, given the track record of technology transfer in the case of dual use technologies, whether India can depend on the US for technology transfer?. The PCPS believes that India should be launching a program of independent or indigenous innovation and not become a domestic source of supply of critical minerals for the US and her allies through the Indo-Pacific Economic Framework.

The PCPS is of the view that, to address supply chains risks most effectively, international collaborative frameworks should engage with, rather than exclude, China. Confrontational strategies with “China being the risk” at the core might themselves be a risk by undermining rational policymaking and leading to disruptive policies. Further our concerns also revolve around the way India is opening up the question of self-reliance in the area of critical minerals. India cannot depend on the US and EU to work for India. India should follow a policy of autonomous development of critical minerals. India should focus on technological self-reliance and increase investments in exploration and R&D for extraction and resource recovery from mineral wastes, beach sands and river sands. India will have to avoid a) import dependence, 2) exercise sovereignty over the resources connected with critical minerals and 3) not fall into the trap of India being treated as a source open to exploitation by the US and allies.

Far-reaching amendments were rushed to the Mines & Minerals (Development & Regulation Act (MMDRA) to allow private companies to mine six atomic minerals (lithium, beryllium, titanium, niobium, tantalum and zirconium). Considering that most mineral resources in the country are located in areas inhabited by tribal communities and mining activity will adversely impact their lives, the Ministry of Mines (MOM) was required to hold a prior consultation with the National Commission for the Scheduled Tribes (NCST). The MMDRA amendments were rushed through by the government and the intention underlying the amendments is to hand over scarce mineral resources to private companies in a hurry, rather than seeking to develop them for the common public good with the help of public sector. The foreign direct investment in critical minerals sector is a matter of serious concern for the PCPS. The PCPS demands revisiting of the policy regime favouring liberalization, privatization and globalization of domestic system of exploration, production and innovation. The PCPS calls upon the Indian Parliamentarians to immediately set up a joint select committee with members from Lok Sabha and Rajya Sabha at the earliest possible.

Statement

India needs public sector to ensure security of critical minerals supply: Concerns and suggestions

The ongoing energy transition and move to low carbon and no carbon energy resources necessitate a dramatic shift to new generation fuels and feedstock and the capitalization of front end and emerging technologies such as digitization, data analytics, machine learning and use of a variety of sensors. Besides the software that will go into the working of each of these technologies, the hardware required to create them is also important. Series of mineral materials of construction are identified to go into the making of these products and are termed as critical minerals in the present context of energy transition, de-carbonization, and development of new and sustainable energy resources. These minerals are distributed not evenly across the surface of earth but there are certain areas where they are available in abundant quantities and therefore it is necessary for all countries to have access to enough of this material for their development programs through negotiated settlements and supply arrangements. With production of renewable energy resources and decarbonization technologies taking a leap forward, the requirement for critical minerals is expected to increase manifold.

The global energy transition to renewable(s), electric mobility, battery storage systems, production of low-carbon hydrogen, solar panels, wind turbines, smart devices, sensors, digital controls, transmission infrastructure, have massively boosted demand for critical minerals and metals. A five times relative increase in demand is predicted over the next decade for certain minerals, especially those connected to energy storage technologies, such as lithium, graphite, and cobalt. According to the US Geological Survey (USGS), Australia, Chile, Argentina, and China have the largest reserves of lithium available in mines around the world today.

Defining critical Minerals

The term ‘critical minerals’ was first used in 1939 when the Strategic and Critical Minerals Stock Piling Act was passed in the United States of America (US). The US Energy Act of 2020 defines critical minerals as an essential component in the manufacturing of a product and having high risk of a supply chain disruption and that serve an essential function in one or more energy technologies, the absence of which would have significant consequences for the national economy and security of the country.

Mineral	Countries of occurrence
Lithium	Australia, Chile, Argentina, China, US, Canada
Cobalt	DR Congo, Australia, Indonesia, Cuba, Philippines, Russia, Canada, China, US, and Zambia.
Copper	Chile, Australia, Peru, Russia, Mexico, US, DR Congo
Nickel	Australia, Indonesia, Brazil, Russia,

These are essential for the advancement of many sectors, including high-tech electronics, telecommunications, transport, and defense. They are also vital to power the global transition to a low carbon emissions economy, and the renewable energy technologies that will be required to decarbonize various sectors and achieve the ‘Net Zero’ commitments of an increasing number of countries around the world. The mining of these minerals is found to cause significant environmental damage and health risks from contaminated water and therefore the recommended technologies and policies to mitigate environmental impacts of mining are to be strictly adhered to. The criticality of minerals varies from country to country depending on domestic availability and projected industrial demand.

Equipment	Critical Minerals required
Solar Panels	Ga, Ge, In,Te,
Wind Turbines	Al, Pr, Nd, Sa, Dy
Batteries	Co, Li, Mn, La, Ce, Pr, Nd, Graphite
Electrical Vehicles	Li, Ni, Co, Mn, and Graphite.
Electrolyzers	Ni, Zr, La, Y, Pt, Pd, Ir, Co, Ta, Gd, Ce
Lighting	La, Ce, Eu, Tb, Y

Identifying India’s critical minerals requirements

In its 2020 report titled Minerals for Climate Action: the Mineral Intensity of the Clean Energy Transition, the World Bank had warned that a low carbon future is going to be mineral intensive. Four minerals – lithium, cobalt, copper, and nickel – are the most important ones in energy transition. There is a huge concentration of these minerals in some regions – for example, 85 % of Iridium and 55 % of platinum globally is in South Africa. About 70% of the global cobalt supplies for lithium-ion batteries come from Democratic Republic of Congo. China being the global leader in mining these rare earth metals accounts for 70% of world production in 2022 and controls almost 95 % of the supply. Major importers are US, EU, and Japan. China has substantial control over mines of these minerals in Chile, Peru, and DRC.

Even though India has some unexplored reserves of some of these minerals, for most of the current requirements imports prevail. The national green hydrogen mission plans to develop 5 million tons of   green hydrogen by 2030 and will need an equivalent electrolyser capacity of 60-100 GW. Green hydrogen electrolysers need critical minerals like platinum, cobalt, nickel, iridium, tantalum, gadolinium, zirconium, lanthanum, cerium and yttrium for construction of cells. Four types of electrolyzer technologies are available of which two are still under development. Popular among them are Alkaline Electrolysis Cell (AEC) and Anion Exchange Membrane (AEM) technologies.  Proton Exchange Membrane (PEM) and Solid Oxide Electrolysis Cell (SOEC) technologies are in the testing phase. The currently popular and proven alkaline (AEC) technology needs a ton of nickel per MW of electrolyzer and the aggregate requirement will be of the order of 100,000 tonnes over the next 6-7 years, which we may have to import. Nickel which is abundantly used in the alkaline electrolysers is readily available and is expected to face no major resource depletion soon. Proton exchange membrane electrolysis uses precious metals such as platinum and iridium. Solid oxide electrolysis is at an earlier stage of development and has potentially higher efficiencies and reversibility. Turbines, batteries, electrical vehicles, and lighting devices use nickel and rare earth elements like lanthanum, yttrium, and zirconium.

India proposed to produce 500 GW of renewable power by 2030 from the current level of 150 GW. The Economic Survey 2022-’23 projects a compound annual growth rate (CAGR) of 49 %  in  the domestic electric vehicles (EV) market by  2030 from 10 lakh units in 2022. A similar growth impetus is expected in digital devices and smart sensors. Besides, GoI has plans also to venture deep into electronics and semiconductor manufacturing. Some of these minerals will be abundantly required to support the above growth in manufacturing to produce solar panels, wind

In line with international practice, India also laid our economic importance and supply risk, as typical   parameters to classify the criticality of minerals.

Perusal of self-reliance in critical minerals requirements

“De-risking” is the latest buzzword in the China strategy of the United States and its allies in respect of critical minerals. It means limiting dependence on and engagement with China. To secure access to critical minerals (CMs) and reduce reliance on China, the US and its allies have been developing networks for ally-shoring / friend-shoring supply chains. A major problem with the “de-risking” strategy in connection with critical minerals is that it treats China as the risk and excludes China from the discussions and collaboration on global supply chain issues. The PCPS is of the view that to address supply chains risks most effectively, international collaborative frameworks should engage with, rather than exclude, China. Confrontational strategies with “China being the risk” at the core might themselves be a risk by undermining rational policymaking and leading to disruptive policies. India should follow a policy of autonomous development of critical minerals and pursue self-reliance including technological self-reliance. This implies that India will have to avoid a) import dependence, 2) exercise sovereignty over the resources connected with critical minerals and 3) not fall into the trap of India being treated as a source open to exploitation by the US and allies.

The US list of includes many minerals that India has not chosen to notify. The definition of a critical mineral can be ‘a mineral the domestic deposits of which according to UNFCC classification, at the present level of indigenous production, would not last more than 15 years from now and in the case of which the reserve replacement ratio at present is less than unity. In addition, any mineral that has strategic implications for India (e.g. Monazite, Titanium, etc.). India’s annual global mineral exploration budget (0.3%) is arguably negligible compared with over 19% by Canada, 12% by Australia, 7% by the United States and 4.5% by China. Similarly, the present technology used to explore subsurface deposits in India needs significant improvements to meet international standards.

Importance should also be given to the acquisition and revision of the exploration database on a globally comparable basis. Exploration and development of all critical minerals needs to be designated as a strategic R&D activity in which public sector should be given commanding heights to keep up with the developments taking place at the global level. Private mining companies driven by profit motive cannot be expected “not to plunder” nor would it be possible for the government to regulate exports. Critical minerals need to be defined as a strategic sector with respect to policy development for exploration, technology development, production and resource recovery[1]. The policy regime favouring liberalization, privatization and globalization of domestic system of exploration, production and innovation needs to be revisited by setting up a committee of the Indian parliament at the earliest possible[2].

A high-power committee of the GoI identified 51 elements as critical including 6 rare earths and 17 belonging to the platinum group – as listed below.

Critical Minerals

Antimony (Sb), Beryllium (Be), Bismuth (Bi), Cobalt (Co), Copper (Cu), Gallium (Ga), Germanium (Ge), Graphite (C), Hafnium (Hf), Indium (In), Lithium (Li), Molybdenum (Mo), Niobium (Nb), Nickel (Ni),  Phosphorous (P), Potash (K), ,  Rhenium (Re), Silicon (Si), Strontium (Sr), Tantalum (Ta), Tellurium (Tu), Tin (Sn), Titanium (Ti), Tungsten (W), Vanadium (V), Zirconium (Zr), Selenium (Se) and Cadmium (Cd).

Rare Earth Elements (REE) – Yttrium (Y), Cerium (Ce), Praseodymium (Pr), Scandium (Sc), Dysprosium (Dy), Europium (Eu),

Platinum Group of Elements (PGE) – Platinum (Pt), Palladium (Pd), Ruthenium (Ru), Rhodium (Rh), Osmium (Os), Iridium (Ir), Lanthanum (La), Terbium (Tb), Neodymium (Nd), Samarium (Sa), Gadolinium (Gd), Erbium (Er), Lutetium (Lu), Holmium (Ho), Promethium (Pm), Thulium (Tm), Ytterbium (Yb)

The Ministry of Mines, Government of India has established the Centre of Excellence for Critical Minerals (CECM) to focus on identifying more efficient ways for discovering next generation critical mineral deposits, support building up of new research and analytical infrastructure required to support the country’s critical mineral demand, provide the necessary support and coordinate with other Ministries/ Departments in framing policies and incentive schemes required for creating a complete value chain of critical minerals in the country, collaborate with international agencies for the strategic acquisition of foreign assets on critical minerals, monitor and prepare the exploration strategy under Ministry of Mines and periodically update the list of critical minerals for India and notify the critical mineral strategy from time to time.

Concerns revolve around the bilateral agreements  

As the clean energy transition is advancing across the world leading to a rapid growth in the demand for critical minerals, several new projects are being developed to supply sufficient material to support the national climate pledges announced by governments. Bilateral agreements have been signed without making the roadmap clear at home about the role of public sector.  The India-US Joint Statement in 2022 reiterated the intention of the two governments, as trusted partners; the two governments have agreed to work together to ensure that our respective markets are well-supplied with the essential critical minerals needed to achieve our climate, economic and strategic technology cooperation goals. On 22-6-2023, India signed a joint statement with the USA announcing among others  for a Mineral Security Partnership (MSP), for“ collaboration to secure resilient critical minerals supply chains through enhanced technical assistance and greater commercial cooperation, and exploration of additional joint frameworks as necessary,…. to accelerate the development of diverse and sustainable critical energy minerals supply chains globally while agreeing to the principles of the MSP including environmental, social, and governance standards”. The way the Government of India is opening up and liberalizing the sector of critical minerals is a matter of concern. The Indian leadership has pledged to hasten bilateral collaboration to secure resilient critical minerals supply chains through “enhanced technical assistance” and “greater commercial cooperation” and “exploration of additional joint frameworks” as necessary.

The G20 Leaders’ Declaration at New Delhi during September 2023 also exhorted to support reliable, diversified, sustainable and responsible supply chains for energy transitions, including for critical minerals and materials beneficiated at source, semiconductors and technologies and acknowledged the Presidency’s Voluntary High- Level Principles for Collaboration on Critical Minerals for Energy Transitions. India is a member of the US led Mineral Security Partnership of 13 countries and the EU which intends to promote investment in critical minerals supply chain globally and is also aspiring to join the Critical Materials Club organized by EU. While the idea is to gain access to advanced exploration and extraction technologies and ensure hassle free supplies, given the track record of technology transfer in the case of dual use technologies, whether India can depend on the US for technology transfer. Should India not be launching a program of independent or indigenous innovation? Is India becoming a domestic source of supply of critical minerals for the US and her allies through the Indo-Pacific Economic Framework? Issues and concerns revolve around the way India is opening up and entering into agreements bilateral or plurilateral

Three-pronged strategy

As we do not have domestic resources for minerals like lithium, cobalt, and nickel we have to fully depend on imports. For minerals like graphite and titanium, the import dependency is more than 50 %. There is the need for a three-pronged strategy to ensure availability of critical minerals to meet its development efforts which include a robust domestic recycling ecosystem and the recovery of minerals from waste stream such us electronic waste and discarded vehicles, revitalizing exploration, and production to augment existing facilities and tying up partnership with key mineral producing countries to set up joint exploration and mining to ensure a regular supply of these minerals to India. By leveraging advanced technologies and knowledge acquired through global partnerships, India can upgrade its domestic processing and manufacturing capabilities, to meet own demand.

India: Import dependency 100 % – Li, Co, Ni, V, Ge, Rh, Be, Ta, Sr

 

Revamp exploration and production

A direct approach to reduce import dependency and consequent supply risk is to boost domestic production wherever possible. For copper and other such critical minerals with large domestic reserves and high economic importance, India will need to deploy an approach of ramping up the exploration and production by augmenting the existing capacity. The recent policy and legislative steps to open mining of six of these critical minerals for the private sector could lead to discovery of new reserves in India and help reduce criticality by reducing supply risks. Mining in deep seated locations need huge investments and advanced technologies for exploration and extraction. The lithium finds in the Salal-Haimana area of the Reasi district of Jammu and Kashmir identified by the Geological Survey of India (GSI) is estimated to have a reserve of 5.9 million tons.

Adequate precaution may be exercised to see that the private entities entering the hitherto forbidden mining business shall not plunder the area for profit motives; instead they may be guided by sustainable mining practices to extract critical minerals for the country’s benefit with least burden to the environment. Most of these mineral deposits are in hill tracts and around the natural habitats of adivasis and local tribes who enjoy traditional and constitutional rights over the area. Government shall ensure that they would respect the laws in force, and evaluate the adverse impacts of mining on tribal communities, forest resources, the local environment, degradation of the river catchments before proceeding to entrust mining leases to companies.

Beach sand mining

The beach sands along the coasts of Kerala, Odisha, Andhra Pradesh, and Tamil Nadu are rich in atomic minerals, especially Monazite, the raw material for the extraction of Thorium, which constitutes the primary fuel for India’s third stage nuclear development program. Currently, only IREL is mining and BARC is processing the monazite minerals. Ilmenite is mined by PSUs, IREL and KMML only. The titanium and zirconium industry in the country also need to further expand considering the rising demand for its derivatives facilitated by all around growth in infrastructure, aviation and aerospace, manufacturing, energy production, maintenance, and repairs.

Despite pressure from many foreign agencies to get access to these precious minerals through some domestic private companies, the successive governments resisted opening these minerals for private mining, till the previous UPA government opened the floodgates to it during its tenure. It is important to note that, no matter which atomic mineral is extracted, it invariably contains monazite as an impurity. Though the Ministry of Mines and the DAE had imposed a low upper threshold limit for the presence of monazite in the atomic minerals extracted, over the time, the UPA government relaxed the need for monazite certification at the exporting ports, creating an enormous scope for monazite being smuggled out on a large scale. This situation may be viewed in the context of countries like China banning export of such minerals to ensure hassle free availability for use of future generations.

Recovery from Waste

The country has immense waste streams of multiple products discarded every year which contain recoverable quantities of critical minerals like spent catalysts, e-waste, discarded automobiles, mud from metal extraction and so on. 95% of lithium from lithium-ion batteries can be viably recycled. The domestic recovery industry has not developed yet on the resource recovery part and thus this waste is disposed of in landfills causing severe pollution all around. If we opt to recover many of these critical and other minerals from multiple waste streams, it will contribute substantially to our demand for these minerals. Gallium (Ga)  and germanium (Ge)  used in computer chips and other applications, can be recovered from the mud left after processing  ores of aluminium, zinc and lead. Bauxite contains almost 50 ppm and Zinc refinery residues contain 0.266 wt. % Ga and 0.363 wt. % Ge. Considering the fact that on an average we are processing 8.91 million tons of bauxite annually (Hindalco, ANARK, Vedanta and NALCO) and 14.48 million tons of lead and zinc ores (HZL) the recovery of Ga and Ge would be reasonably substantial.

Tie up with producer countries

The third option is to consider forging intergovernmental partnership through bilateral and plurilateral arrangements   with key mineral producing countries, as suggested by NITI Aayog, and set up joint exploration and mining activities to ensure sustainable supply of these minerals to India. Multilateral funding from India and abroad could also support companies and projects focused on developing the value chain for these minerals. The Khanij Bidesh India Ltd (KABIL), a joint venture of three PSEs – National Aluminum Company, Hindustan Copper, and Mineral Exploration Company-   is undertaking pioneering efforts to secure critical minerals through overseas buying of mining assets in Argentina, Chile, Bolivia, and Mongolia.  To enable this, GoI has amended the mining laws of six critical and deep-seated minerals and offshore mining in August 2022 to encourage mining by the private sector companies.

Centre’s approach to management of critical minerals- Concerns & suggestions

With a view to provide an impetus to development of critical minerals[3] by attracting both domestic and foreign direct investment, MOM also introduced a Bill to amend the Mines & Minerals (Development & Regulation Act (MMDRA) for allowing private companies to mine six atomic minerals (lithium, beryllium, titanium, niobium, tantalum and zirconium), certain critical minerals [molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, platinum group of elements, minerals of “rare earth” group (not containing Uranium and Thorium); fertilizer minerals such as potash, glauconitic and phosphate (without uranium)] and some high-valued deep-seated minerals (gold, silver, copper, zinc, lead, nickel, cobalt, platinum group of minerals, diamonds).

Except in the case of the deep-seated minerals for which exploration licenses would initially be subject to auction, in the case of the others minerals cited above, composite exploration-cum-development licenses would be put up for auction. In the case of deep-seated mineral blocks, the blocks explored by the exploration license holder would be directly auctioned for mining leases, which are expected to fetch better revenues to the States. The exploration agency would also benefit by getting a share in the auction premium payable by the mining lease holder [https://pib.gov.in/PressReleasePage.aspx?PRID=1945102]. Even though auctions will be conducted by the Central Government, the mining leases or composite licenses for these minerals to the successful bidders will be granted by the State Government and the auction premium and other statutory payments shall continue to be received by the concerned States. [https://pib.gov.in/PressReleasePage.aspx?PRID=1945102]. In addition, the Centre further amended the Offshore Minerals (Development & Regulation) Act of 2002, applicable to the territorial waters, the continental shelf, the exclusive economic zone and the other maritime zones of India, to permit the government to give composite exploration-cum-development mining leases to private companies through the auction route, for all offshore mineral blocks other than those of atomic minerals.

Inadequate debate on recent MMDRA amendments

Such far-reaching MMDRA amendments were finalized without any meaningful discussion in the Parliament. Considering that most mineral resources in the country are located in areas inhabited by tribal communities and mining activity will adversely impact their lives, MOM ought to have held a prior consultation with the National Commission for the Scheduled Tribes (NCST) as required under Article 338A of the Constitution. Such a consultation never took place. It is unfortunate that the Parliament did not have an opportunity to have the considered views of the NCST before the Bill was approved in a hurry. Such legislative measures ought to be subject to a wider public debate before they are placed before the Parliament. The way the above-cited amendments were rushed through by the government gives one an impression that the intention underlying the same is to hand over scarce mineral resources to private companies in a hurry, rather than seeking to develop them for the common public good.

Act without a definition of “critical minerals”:

The Report of the Committee on Identification of Critical Minerals, Ministry of Mines (June 2023) defines critical minerals as those minerals that are essential for economic development and national security. The lack of availability of these minerals or concentration of extraction or processing in a few geographical areas may lead to supply chain vulnerabilities and even disruption of supplies. Interestingly, the list of critical minerals identified by MOM do not mention several important minerals included by the USA in its own list of “critical minerals” as identified by the US Geological Survey (USGS) in 2022  (https://www.iea.org/policies/15271-fi nal-list-of-critical-minerals-2022). They are Aluminium, Arsenic, Barites, Cerium, Cesium, Chromium, Dysprosium, Erbium, Europium, Fluorspar, Gadolinium, Holmium, Iridium, Lanthanum, Lutetium, Magnesium, Manganese, Neodymium, Palladium, Platinum, Praseodymium, Rhodium, Rubidium, Ruthenium, Samarium, Scandium, Tantalum, Tellurium, Terbium, Thulium, Ytterbium, Yttrium, and Zinc.

“Mineral criticality is not static, but changes over time, the 2022 list of critical minerals was created using the most recent available data for non-fuel mineral commodities. However, we’re always analyzing mineral markets and developing new methods to determine the various and evolving critical mineral supply chain risks.” (https://www.usgs.gov/news/national-news-release/us-geological-survey-releases-2022-list-critical-minerals). We feel that the list of critical minerals as notified by MOM is not comprehensive enough to reflect the criticality of minerals in view of their importance from the domestic point of view and in view of their criticality for the global manufacturing supply chains.

For example, the economically mineable deposits of Chromium (UNFCC) in India are 104 MT out of which only 30% are of the higher grades. Against this, the annual level of production is around 4 MT, which implies that, at the present level of extraction, the available deposits may not last more than 25 years, unless adequate exploration investments are made to ensure sustainable mining in the long-run. In view of its strength and anti-corrosive characteristics, the global demand for Chromium has been on the increase for use in strategic sectors such as aerospace, defense and electronics industries. Thus, there is no reason as to why it should not be considered to be a critical mineral by MOM, as has been the case with the USA.

We would therefore suggest that MOM reviews the list of critical minerals and enlarge the same to take into account their criticality not only from the domestic point of view but also from the global point of view. The list should not be treated as a static one but reviewed periodically to take into account the shifting global trends.

Several non-critical minerals are being over-exploited, necessitating their conservation:

In this connection, we wish to caution the government that even non-critical minerals such as iron ore in India can no longer be considered as such, considering that the extractable iron ore deposits as per UNFCC classification, at the present levels of production, may not last more than 27 years. Compounding it is the fact that India is exporting its high-grade iron ore mostly to China and importing value-added steel products from that country. It is high time that the concerned Ministry reviews its policy of exporting iron ore, strengthens the CPSE steel companies such as RINL as stated in the national policy on steel and provides them captive iron ore blocks of their own and takes such measures as necessary to conserve the mineral. There are several other minerals that fall in this category.

Atomic minerals:

The latest MMDRA amendments allow private mining of six atomic minerals ((lithium, beryllium, titanium, niobium, tantalum and zirconium). In 2019, the same MOM revoked all private licenses in respect of beach sand mining involving the mining of atomic minerals. This implies that, for reasons best known to it, the MOM has made a volte-face and re-opened the floodgates to private parties. Even though the latest amendments exclude Thorium and Uranium from private mining, in the specific case of beach sand mining in States such as Odisha, AP, Tamil Nadu and Kerala, the extraction of the other atomic minerals necessarily leads to extraction of Monazite, the raw material that contains Thorium, despite the best efforts of the Department of Atomic Energy (DAE) to ensure that the Monazite content does not exceed a threshold limit. In the past, there was evidence of Monazite being smuggled out of the country in the guise of export of other atomic minerals. In practice, unless each and every consignment of the permitted atomic minerals is subject to physical “Monazite verification testing”, it would not be feasible to prevent such smuggling. Thorium being the primary fuel for the third stage of DAE’s nuclear development programme, it has serious strategic implications. The Commission wishes to place on record its concerns on this.

On 22-6-2023, India signed a joint statement with the USA announcing among others for a Mineral Security Partnership (MSP), for “collaboration to secure resilient critical minerals supply chains through enhanced technical assistance and greater commercial cooperation, and exploration of additional joint frameworks as necessary,…. to accelerate the development of diverse and sustainable critical energy minerals supply chains globally while agreeing to the

Principles of the MSP including environmental, social, and governance standards”

Should the government hand over critical mineral blocks to private companies?

The latest policy initiatives of the government for developing critical minerals are to allow private companies to invest in exploring and mining them. The Commission wishes to raise the following concerns: Private companies, predominantly driven by their profit-maximization objective, tend to invest more on mineral production than on exploration, which in the long run would run counter to sustainability in mining activity, as mineral deposits will deplete unless the quantities extracted are made good by adding to the deposits through exploration. While it may be argued that the government could cap the annual levels of mineral production to facilitate sustainability, in view of the strong nexus that exists between political parties and mining companies as a result of the increasing dependence of the former on the latter for political funding, it is doubtful whether any political party would resort to such regulation.

It is not as though private companies bring in significant investments into mining critical minerals. The past track record of private mining companies in India show that very few of them bring their own equity investment. They largely depend on loans from PSU banks, overleveraging the loan amounts, which in turn erode their debt service capability. Many banks are wary about extending loan assistance for private mining (https://theprint.in/india/analysis-indias-coal-mining-bet-stumbles-as-wary-banks-weigh-rising-risks/1677680/). In any case, a large portion of funds for private investment in mining comes from public sources, which negates the argument that private companies bring in additional investment.

While justifying the entry of private companies to mine critical minerals, the government has stated that it would facilitate FDI inflows in addition to domestic investments. It should be noted that FDI inflows may supplement domestic investments marginally but they also expose critical minerals to intrusive foreign control, which may have adverse strategic implications. Mineral resources in general and critical minerals in particular are located in sensitive regions like J&K (e.g. lithium) and the Northeast (e.g. chromium). From the strategic point of view, involving private mining companies there with FDI support may not be an appropriate option. Private mining can lead to indigenous mineral resources being exploited to meet the global demand, rather than processing them into value-added products for domestic use.

To ensure that mining activity remains sustainable in the long run, it is imperative that the mining activity remains under public control. Considering that mineral resources belong to the nation, it is necessary to ensure that “their ownership and control are so distributed as best to sub serve the common good  (Article 39 of the Constitution) Critical minerals have strategic implications for the country and, therefore, it is all the more imperative that public control is retained over them”.

Mineral Security Partnership (MSP) with the USA:

On 22-6-2023, India signed a joint bilateral agreement with the USA announcing, among others,

a Mineral Security Partnership (MSP), for “collaboration to secure resilient critical minerals supply chains through enhanced technical assistance and greater commercial cooperation, and exploration of additional joint frameworks as necessary,…. to accelerate the development of diverse and sustainable critical energy minerals supply chains globally while agreeing to the MSP Principles including environmental, social, and governance standards”. It is ironic that India should omit 33 minerals from its own list, though those minerals find place in the US list but should enter into a bilateral deal for technological collaboration and for jointly exploiting critical minerals. One gets the impression that the MSP would imply an asymmetric technology collaboration arrangement with the USA, which may sub serve USA’s interests more than India’s.

India acquiring overseas critical mineral assets:

While we welcome the government’s announcement (https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1942027) that a joint venture company namely Khanij Bidesh India Ltd. (KABIL) has been incorporated with equity contribution from three CPSEs, namely, National Aluminum Company Ltd, Hindustan Copper Ltd and Mineral Exploration Company Ltd with the objective to identify and acquire overseas mineral assets of critical and strategic nature such as Lithium, Cobalt & others so as to ensure supply side assurance. KABIL would engage with countries like Argentina, Australia etc. to acquire critical and strategic mineral resources. It is desirable that KABIL builds up a diversified portfolio of overseas mineral sources to minimize asymmetric exposure risk. It is important that KABIL is financially enabled to compete with domestic private companies and global players, so as to secure access to overseas mineral assets.

Need to ensure that mining activity remains fully compliant with environmental and human rights norms:

Most mineral resources including critical minerals are located largely in areas notified under the Fifth and the Sixth Schedules to the Constitution and in areas of forest cover, where tribal communities and other traditional forest dwelling communities live. As far as the Scheduled Areas are concerned, there are special laws in force that protect tribal rights.  The Panchayats (Extension to the Scheduled Areas) Act [PESA] empowers the tribal Gram Sabhas to have a say in decision-making on activities such as mining that impinge on their lives. There are statutory provisions applicable in the Scheduled Areas in different States that restrict alienation of land, mineral rights etc. to non-tribal including private mining companies. In both the Scheduled Areas and elsewhere, wherever there are tribal communities and other traditional forest dwelling communities dependent on forest resources, the provisions of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act [“Forest Rights Act” or FRA] are attracted. Under FRA, the local Gram Sabhas have an important role to play in taking decisions on mining. Under that legislation, forest dwellers are entitled to individual occupation rights and the communities who depend on those forest resources are entitled to community rights.

The latest MMDRA amendments should have referred to those protective provisions and the necessity of prior consent of the concerned Gram Sabhas being mandatory. Bypassing the Gram Sabhas would prima facie render any unilateral action on the part of the Centre and the States non-compliant with the law of the land. In principle, human displacement caused by mining has enormous social costs that need to be understood, assessed properly and those displaced adequately compensated both physically and monetarily. The Centre may have to ensure that a reasonable share of profits from mining accrues to the displaced.

In particular, taking up offshore mining activity will have far reaching adverse implications for the marine environment and it is likely to affect the lives of the traditional fishing communities that depend on marine resources. The UPA government proposed the Traditional Coastal and Marine Fisherfolk (Protection of Rights) Act in 2009 but failed to get the Bill enacted by the Parliament. Before the government initiates offshore mining activity, such legislation should be introduced.

Forest resources vs Mineral benefits:

In the context of diminishing forest cover in India, forest wealth is as critical, if not more, as mineral wealth. Unless the social costs and benefits of forests and their biodiversity vis-a-vis the returns expected from mining are evaluated, the policy on mining including mining of critical minerals will fail to subserve the public good. Both MOM and the Union Ministry of Environment, Forests & Climate Change (MEFCC) are advised to draw inputs on this from a landmark study on the economic value of biodiversity, commissioned a couple of years ago by the UK government under the aegis of the well-known economist, Sir (Prof) Partha Dasgupta (https://www.gov.uk/government/publications/final-report-the-economics-of-biodiversity-the-dasgupta-review)

Conclusion:

We feel that the CPSEs should have a central role in the exploration and development of critical minerals. In the long run, this is necessary from the point of view of safeguarding national security and promoting self-reliance. The present policy of indiscriminate privatization of the CPSEs, in our view, is ill-advised and against the national interest. To sum up, India needs to ensure uninterrupted supplies of critical minerals through enhanced domestic mineral exploration, extraction, and recycling, along with assured supply elsewhere to advance its green agenda, climate crisis mitigation and digital enablement. India is short on proven critical minerals deposits. In addition, we should also point out that certain minerals such as Monazite have strategic implications and the beach sands that contain it need to be carefully managed in the public sector.

To maintain an uninterrupted supply and reduce dependence on on-consistent sources India needs a policy on the following aspects: technology advancement capable of ensuring the technology upgradation in the organization of the exploration process, advanced beneficiation techniques to develop high value ores from low grade high tonnage deposits, material substitution R&D and recycling and resource recovery on a large scale with zero-waste policy.

[1] Vedanta dumps waste from Zinc/lead mining operations without extracting strategic critical minerals like gallium.

[2] The Beach Sand Minerals could be mined only by two Public Sector Companies, namely, Indian Rare Earths Limited (IREL) and Kerala Mines & Minerals Limited (KMML). IREL is a Government of India PSU under the Administrative Control of the Department of Atomic Energy. KMML is a PSU owned by the Government of Kerala. This was the position till 1993. In the year 1993, the Beach Sand Mineral Policy was liberalized, as part of the general Economic Reforms initiated in 1991 by the then Prime Minister P.V. Narasimha Rao and the then Finance Minister Man Mohan Singh. The policy, inter-alia provided that (a) Fully Owned Indian Companies could do Mineral Separation, (b) Foreign Companies could bring in FDI ( as per the extant policy), but put up Value Addition Plants in India. In short Foreign Companies can do mineral separation of beach sands, only if they put up Value addition plants within our Country (for example- from Ilmenite to Titanium Dioxide (Pigment), from Ti02 to Titanium Sponge etc). Private firms (both Indian and Foreign) were restricted from processing or exporting monazite .After extracting all other minerals, the “monazite tailings “were to be handed over to IREL. The above Policy was substantially abused both by fully owned Indian Companies and by some Foreign Companies. A Company based in Tuticorin ( M/s V.V. Minerals ) owned by S.Vaikundarajan became the Country’s largest beach sand mineral exporter. He has been accused of large scale illegal mining as well as illegal export of monazite. A PIL in the Madras High Court led to the Court banning export of beach sand minerals and the Rules getting amended in 2016. (Alas illegal mining and illegal exports continue thanks to Political Patronage, Kickbacks and Corruption)

[3] The Union Ministry of Mines (MOM) has notified 30 minerals as “critical minerals”. They are Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, Platinum Group of Elements (PGE), Phosphorous, Potash, Rare Earth Elements (REE), Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.