Rare Earths, global politics, and India's imperative for diversified supply chains

Joseph S Nye, once observed, “The power to control information and technology has become the third dimension of power in the international system.” The emergent geopolitical scenario undeniably underscores the validity of Nye’s assertion as access to and control over critical minerals and rare earth metals are becoming linchpins in the global power chessboard. The actions of China, a country with one of the largest reserves of strategic minerals, have thrown into sharp relief the pertinence of this assertion. By proposing export restrictions from 1 August, 2023, on two pivotal minerals — gallium and germanium — indispensable for the production of semiconductors, missile systems, and solar cells, China has not just flexed its geopolitical muscles but also underscored a profound shift in the international order. This show of force, coming ahead of economic talks with the United States, embodies a new form of mercantilism that is beginning to define the contours of international competition. Rather than just being a trade dispute, this is a clear embodiment of how control over resources is being wielded as a tool to achieve technological dominance. As these two nations increasingly calibrate their trade rules to jostle for technological supremacy, the implications of this will resonate far and wide, redefining the essence of power in the digital age. This development has palpable repercussions for India too. As a nation poised at the intersection of technological growth and expanding its own geostrategic influence, India’s dependency on China for these critical minerals could be a potential Achilles’ heel. Thus, these restrictions, while primarily aimed at the US, serve as a cautionary reminder to India of the imperative need to diversify its critical mineral supply chains and reduce its dependency on a single supplier nation. India stands at a crossroads, where a sustainable and technologically advanced future intertwines with its aspirations for self-reliance, under the vision of “Atmanirbhar Bharat”. With the world undergoing a paradigm shift towards green energy, the rise of electric vehicles, and other clean technologies, the demand for critical minerals like lithium, nickel, and cobalt has skyrocketed. Such minerals have carved their indispensable roles in modern technologies from electric batteries to defense applications, and their significance in the global supply chains cannot be understated. However, the existing landscape presents challenges for India. Despite housing 6 per cent of global rare earth reserves, India’s production only accounts for 1 per cent of the world’s output. A staggering reliance on China for these imports is evident, with 92 per cent and 97 per cent of India’s rare earth imports by value and quantity originating from China. This skewed dependency, juxtaposed with India’s exclusion from global alliances such as the Minerals Security Partnership, underscores the urgent need for an integrated mission focusing on critical minerals and rare earth metals. The reasons are manifold. As India surges forward with significant advancements in solar energy, Electric Vehicles, specialty chemicals, and a burgeoning defense sector with projects like stealth aircraft and missile programs, the underpinning of all these advancements is strategic minerals. From cellphones to nuclear reactors, these minerals are at the core. . The recent emphasis on supply chain resilience, especially concerning critical minerals and emerging technology during the US-India 2+2 dialogue, sheds light on the global acknowledgment of this necessity. As India grapples with the urgency of a shifting global energy landscape, its rare earth mineral reserves have become a focal point of strategic significance. Just months after the pioneering discovery of lithium reserves in Jammu and Kashmir, the Geological Survey of India has unveiled an even larger trove in Rajasthan’s Nagaur district, poised to satisfy 80 per cent of the nation’s Lithium demand. The government, understanding the urgency of the situation, has sprung into action, with plans to auction these newly found lithium and other rare earth minerals within the year. An amendment to the Mineral Concession Rules of 2016 is proposed to solidify the process of determining the value of these estimated resources. Moreover, the existence of over 13 million tonnes of in-situ monazite, sprinkled across the coastlines and inland regions, is a testament to the untapped potential of India’s rare earth ecosystem. Although Neodymium and Praseodymium are present and extracted at high purity levels, the lack of high-value elements like Dysprosium and Terbium raises a significant challenge. Compounded by the existing environmental regulations, forest areas, and human settlements, the mining of these rare earth elements becomes a delicate balancing act. To truly embark on a path of self-sufficiency, India must not only mine and extract its wealth of minerals but also invest in the downstream value chains for manufacturing. Policy frameworks, mining sector reforms, and investments in research and technology are the need of the hour. Furthermore, the proposal by the Confederation of Indian Industry to establish an ‘India Rare Earths Mission’ and to integrate these minerals into the ‘Make In India’ initiative exemplifies the path forward. The India Rare Earth Minerals Mission can be staffed by expert personnel, and it can guide the development of a robust rare earth minerals sector, emphasizing private sector involvement in exploration, mining, and processing, thereby diversifying our supply sources and reducing vulnerability to external disruptions. It will champion public-private partnerships for effective resource utilization and stimulate investment in cutting-edge research and development. It must enhance downstream industries like refining, processing, and manufacturing rare-earth-based products via collaborations among governmental entities, educational institutions, and national and international organizations. Incorporating the Deep Ocean Mission, the initiative will also strive for sustainable extraction of critical minerals from the Indian Ocean bed, reinforcing domestic supply. Simultaneously, technological advances to ensure efficient and eco-friendly extraction and utilization methods will be integral to maintaining the sector’s economic viability. Furthermore, diplomatic engagements will be intensified to foster global alliances, such as the Minerals Security Partnership, to provide strategic opportunities in clean energy technologies, reduce dependence on any single country for rare earth supplies, and contribute to worldwide climate change mitigation and energy security efforts. With these comprehensive strategies, the India Rare Earth Minerals Mission holds the potential to create a self-sufficient, technologically advanced India, catering to crucial mineral demands across industries. The author is Additional Private Secretary (Policy & Research), Economic Advisory Council to the Prime Minister. He tweets @adityasinha004. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook , Twitter and Instagram .