India’s reliance on China for critical minerals

In 2023, the Ministry of Mines identified 30 critical minerals essential for India's economic development and national security. While the report highlighted India’s dependency on imports for 10 of these minerals, it did not adequately address the growing concern about India’s reliance on China, the dominant player in the global critical mineral market.

China’s Dominance in Critical Minerals

China is a major global player in the critical minerals sector, holding unparalleled control over both mineral reserves and processing capabilities.

• Mineral Reserves: China has significant reserves in copper, lead, zinc, nickel, cobalt, lithium, gallium, germanium, and graphite, with an exploration investment of $19.4 billion in 2023, leading to the discovery of 132 new deposits, including 34 large ones.
• Processing and Refining Control: China controls:
• 87% of rare earth processing
• 58% of lithium refining
• 68% of silicon processing
• Strategic Investments: China has heavily invested in overseas mining projects and developed unmatched midstream refining capabilities, which raises supply chain vulnerabilities for countries like India, the U.S., and the EU.

China’s Export Control Strategy

China uses its dominance over critical minerals as a strategic tool. This approach includes:

• Weaponizing Exports: Beijing targets minerals essential for sectors like semiconductors, batteries, and high-tech manufacturing.
• Careful Balance: While China restricts minerals like rare earths, antimony, gallium, and germanium, it avoids disrupting its own industries or antagonizing key trade partners, as seen in the 2010 rare earth embargo against Japan and its recent actions in 2023.

India’s Dependency on China for Critical Minerals

India’s dependency on China for certain critical minerals is alarming. Below are six minerals where India’s dependency exceeds 40%:

• Bismuth: 6% (used in pharmaceuticals and chemicals, with few alternative sources).
• Lithium: 82% (critical for EV batteries, with China controlling 58% of global refining).
• Silicon: 76% (important for semiconductors and solar panels, with few countries having advanced processing capabilities).
• Titanium: 6% (used in aerospace and defense, though alternatives exist, the costs are high).
• Tellurium: 8% (important for solar power and thermoelectric devices, with China controlling 60% of production).
• Graphite: 4% (indispensable for EV batteries and steel, with China controlling 67.2% of global production, including battery-grade material).

Why Does India Rely on Imports?

India’s reliance on imports is driven by several factors:

• Mineral Deposits: While India is rich in mineral resources, many critical minerals are located deep underground, requiring high-risk investments in exploration and mining technologies that discourage private sector participation.
• Processing Limitations: India lacks the technological capability to process certain minerals. For instance, despite the discovery of 9 million tonnes of lithium in Jammu and Kashmir, India faces significant challenges in extracting lithium from clay deposits due to limited processing capabilities.

India’s Efforts to Secure Critical Minerals

India has taken a proactive approach to reduce its dependency on China:

• KABIL: It is a joint venture of three state-owned companies aimed at securing overseas mineral assets.
• Strategic Partnerships: India has joined initiatives like the Minerals Security Partnership and the Critical Raw Materials Club to diversify supply sources and strengthen global relationships.
• Research and Development: India is investing in research through organizations like the Geological Survey of India and the Council for Scientific and Industrial Research (CSIR). The focus is on enhancing mineral exploration, improving processing technologies, and reducing dependency on virgin minerals through recycling and circular economy practices.
• Incentive Programs: The government is also offering production-linked incentives for the extraction and recycling of critical minerals to boost domestic capabilities.