India Plays Defence
India Plays Defence
Last week's decision to auction locations to mine critical green minerals is another effort by India to secure its strategic interests. EPISODE #154
Dear Reader,
A very Happy Monday to you.
Last week I wrote about ‘Green Conflict Minerals’. In an amazing coincidence, the union government announced the auction of rights to mine these critical green minerals within India last Thursday. This move has not happened in a vacuum. In fact, it is part of a larger plan that also involves multilateral pacts to secure global supply chains for these green minerals.
In a grim reminder of future challenges, beginning 1 December, China has imposed curbs on export of graphites used in the manufacture of EVs.
This week I explore how India, belatedly though, is playing defence in securing the supply chain for green minerals. Do read and share your feedback.
In other news I am happy to share that Capital Calculus is now writing on two more platforms: NTDV online and Russia Today International.
The cover picture is taken by andreas160578 and sourced from Pixabay
A big shoutout to Surendra, Rajit, Gautam, Premasundaran, and Aashish for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by all you readers. Gratitude also to all those who responded on Twitter and Linkedin.
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The Green Minerals Auction
Last Wednesday, India took another step to secure its green minerals supply chain by launching its first ever auction of 20 blocks of critical and strategic minerals spread across the country.
Coincidentally, it was just a day ahead of the start of the Conference of Parties or COP28 meetings in Dubai. The presence at the auction of key members of the G20—United States, European Union and Australia— and the International Energy Agency (IEA), among others, only reaffirmed India’s determined efforts to internationalise the challenge posed by the hegemony, especially by China, in the mining of such green minerals.
Clearly, India’s decision to auction the rights to mine green minerals did not happen in a vacuum. If you take a step back it is apparent that the latest move is part of a larger plan—using bilateral, minilateral and multilateral platforms—to secure the global supply chain for green minerals.
In short this was a collective message that the supply chain for green minerals cannot be weaponised.
The Auction
It was a happy coincidence that last week’s newsletter dwelled on the precarious state of the supply chain of green minerals and flagged it as a strategic concern for India that could not be ignored.
In fact, I dipped into the same newsletter for my monthly column in the Economic Times, which coincidentally got published the day before the press conference to announce the auction of green minerals.
Sharing the screen grab below.
I wrote a follow-up for NDTV, the day after the auction was announced at a press conference.
In this piece, I argued:
“While India woke up rather late to the strategic threat relating to the supply chain of critical green minerals, it has initiated a response on multiple fronts.
At one level, it is pursuing, in coordination with other key members, multilateral solutions at the G20 forum. At another, it has also engaged in mini-laterals, like the Minerals Security Partnership (MSP), which now includes 14 member countries piloted by the US.
Finally, it has launched efforts, beginning with the auction announcement on Thursday, to locate green minerals within India's borders.
This rear-guard action should be welcomed and may return dividends in the long run. Until then, the world will be walking on eggshells while managing the desired energy transitions by relying on such a vulnerable supply chain.”
In the build-up to the auction the union government set up a committee in November 2022 under the aegis of the ministry of mines to identify the critical and strategic minerals.
The committee then laid out the plan for securing the critical minerals supply chain. This meant creating an entire value chain that extends from exploration to recycling. This is to be developed on five pillars:
Upstream Exploration (locating the minerals within India);
Upstream Mining and Extraction;
Midstream Processing, Refining and Metallurgy;
Downstream Component Manufacturing and Clean, Digital and Advanced Technology Production;
Material Recovery and Recycling.
Based on this architecture the committee, after mutual consultations with other key ministries, identified 33 elements that posed a supply chain risk.
Sharing the heat map below sourced from the committee report.
After further consultations the committee identified a set of 30 critical minerals based on their economic importance and supply risk.
Sharing the screen grab below.
The auction offered four mineral blocks for mining lease and 16 mineral blocks for composite licence. The tenders were invited from 29 November.
Multilateral Support
Coincidentally or otherwise the auction announcement came just 48 hours ahead of China kicking off curbs on graphite, a key material in EV batteries, from 1 December. The restrictions, require companies to acquire a license for export.
The decision, seen as retaliation to the curbs imposed by the US on high-end silicon chips, only confirms the worst fears about the vulnerability of the global supply chain for critical green minerals.
Exactly why the presence of the battery of global representatives at the auction was no coincidence. Implicitly, the rest of the world was sending out a strong message against efforts to weaponise green supply chains.
Mary Burce Warlick, Deputy Executive Director of the IEA and a retired US career diplomat, did not mince her words in her incisive remarks:
“We can't risk climate goals being jeopardized by supply chain bottlenecks. Despite growing investment in new supplies today's critical mineral supply chains have worryingly high levels of geographic concentration.
The top three producers are responsible for over 80% of mined lithium and cobalt supplies, and over 90% of graphite and rare earth elements are produced in a single country (China). And IEA analysis suggests that for some minerals, the level of concentration has even risen in recent years.
And history shows that when too much reliance is concentrated in one company in one region one trade route.
We risk paying a heavy price and that's why we urgently need to reverse this trend, especially in the midstream processing and refining sectors.”
In another development, in September India joined the 14-member grouping, Minerals Security Partnership (MSP), forged by the United States in June 2022 to secure global supply chains for green minerals.
Preceding this, India used its chairmanship of the G20 to guide an outcome document arguing the same at the meeting of the energy ministers in Goa in July.
The ministers present a the gathering emphasised the need to maintain responsible and sustainable supply chains for these minerals. They added that it was imperative for the supply chains to benefit all, including those in the developing world.
The outcome document spelt this out unambiguously.
“We acknowledge that certain minerals, materials and technologies are critical for energy transitions and there is a need to maintain reliable, responsible and sustainable supply chains of such critical minerals and materials, as well as semiconductors and related technologies complying with the principles of market economy and international trade rules while respecting the sovereign rights of countries.”
If you connect all these dots it is clear that India finally has a plan that seeks to head off the eventuality of holding global supply chain of green minerals hostage to super power rivalries. At the same time it is also trying to ensure that it also builds its own internal capacities to minimise global dependence.
Ideally India’s response should have come about sooner. Maybe two decades ago when China was plotting its plan on securing green mineral supplies for itself.
Guess, it is a case of better late than never.
Recommended Viewing/Reading
Sharing the latest post of Capital Calculus on StratNews Global.
The global high table to battle climate change, COP or the Conference of Parties, kicked off in Dubai last week. You are aware that in the run-up to the meet I have pivoted the weekly offering on StratNews Global to focus almost entirely on issues related to COP. Surprised that mainstream media hasn’t done the same.
Last week I explored India’s climate diplomacy. Beginning with the COP meet in Paris, Indian diplomacy has completely reinvented India on the global stage: From a naysayer to an active member working towards a solution to battle climate change. This dramatic flip flop has altered global perception about India.
To explore this I spoke to Constantino Xavier, Fellow, Centre for Social and Economic Progress (CESP), who recently published an edited volume tracking India’s energy transition efforts. In a very insightful conversation Constantino laid out the implications of India’s new climate persona.
Sharing the link below. Do watch and share your thoughts.
Till we meet again next week, stay safe.
Looks like India was forced to take the jump into large scale exploration of commercial mining for critical green minerals and rare earth metals. The copper smelting plant in Tamil Nadu, operated by the Vedanta Group was forced to shut down in the face of large groups of people agitating against degradation of environment and causing life threatening damage to health of the local population. There were whispers that China had influenced the agitation, in order to have a monopoly in copper supplies. Copper is known to cause skin allergies and sometimes more serious health problems. Fortunately a sizeable deposit of Lithium has already been discovered in J & K. Serious exploration will definitely yield more fruitful results, in the near future. That India had preferred to purchase the minerals earlier is I feel, justified and mature, considering the environmental degradation caused by mining in general. Countries like China will continue to create fresh problems for the rest of the world, due to their insatiable desire for power. Very informative and topical. Keep us updated Anil. Thank you 😊
Dear Anil,
Excellent article on " minerals of the future"! They are needed to support the transition to clean energy technologies like solar panels, wind turbines , electric vehicles, batteries etc.Given India s domestic demand and potential in these sectors, their growth can lead to job creation, income generation and innovation.These minerals are vital for defence, nuclear energy application, aerospace etc.
But as you have written,most of these minerals are imported and India is heavily dependent on other countries for its supply.
The government is actively looking in this crucial area which is the right step !!