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07/11/2024
Mining News

India’s strategic imperative: Navigating critical mineral imports for energy transition

India must strategically navigate its import policies to mitigate trade risks while strengthening international relationships for acquiring essential minerals needed to accelerate its energy transition, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report focuses on five critical minerals—cobalt, copper, graphite, lithium, and nickel—evaluating India’s import dependency, trade dynamics, domestic availability and global price trends. It highlights that India is heavily reliant on imports for these minerals, with a complete dependency on imports for lithium, cobalt and nickel.

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With demand for critical minerals projected to more than double by 2030, and domestic mining expected to take over a decade to ramp up production, the urgency for a robust import strategy is clear.

“India should work to de-risk its sourcing of critical minerals by exploring new international resources and accelerating domestic production. Establishing strong bilateral relations with mineral-rich nations must be a priority,” says Charith Konda, Energy Specialist at IEEFA.

The report emphasizes the importance of investment opportunities in resource-rich countries such as Australia, Chile, and several African nations like Ghana and South Africa.

In particular, the report points to synthetic and natural graphite as minerals requiring policy intervention to diversify procurement sources. Currently, India relies heavily on China for both types of graphite. Countries such as Mozambique, Madagascar, Brazil and Tanzania emerge as potential partners for graphite trading within the Global South cooperation initiatives.

India also faces significant import dependence for copper cathodes and nickel sulphates, primarily from Japan and Belgium. To enhance supply security, the report suggests looking towards the U.S., which ranks as the fifth-largest copper producer globally.

For lithium oxide and nickel oxide, while dependency on a single country is lower, overall imports largely stem from Russia and China, both of which present trade risks. “Developing domestic lithium refining capacity will help India integrate more effectively into the global lithium supply chain,” Rakheja adds.

The report notes the Indian government’s proactive efforts to boost domestic production of critical minerals, highlighted by auctions from the Ministry of Mines and the planned Critical Minerals Mission.

“The auctions for critical minerals mining blocks represent a key opportunity for India to focus on building refining and processing capabilities, positioning itself as a global value-adding hub,” says Rakheja.

“Support from the government through viability gap funding and technology development will be crucial in promoting these auctions and enhancing domestic production of critical minerals. A stable supply is vital for India to achieve its renewable energy objectives,” concludes Konda.

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