In the Union Budget 2024-25, Union Finance Minister Nirmala Sitharaman announced the setting up of a Critical Mineral Mission. In August the Ministry of Mines organised a seminar to discuss its objectives. Officials noted that efforts are being fast tracked in ‘mission mode’ towards three aims: expand domestic production, prioritise the recycling of critical minerals, and incentivise overseas acquisition of assets.
Work on these fronts is underway. The amendment made to the Mines and Minerals (Development and Regulation) Act of 1957, resulted in the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 removing six minerals from the atomic list, thus allowing the private sector to explore these in India.
To engage with mineral-rich countries overseas with a mandate to secure supply of critical minerals for the Indian economy, a joint venture of three public sector undertakings, Khanij Bidesh India Limited (KABIL), was founded in 2019. Its first major agreement for lithium exploration and mining was signed in January 2024 and provides access to five blocks owned by Camyen, in the Catamarca province in Argentina.
Major and medium-scale mining companies in India are also seeking opportunities to ensure a steady feedstock of minerals. However, India’s capacity for exploration and processing such minerals is nascent. It lacks manufacturing capacity of end-use components, and needs to upskill its labour force, which is crucial for battery manufacturing.
Situating Africa in India’s supply chain
For India’s Critical Minerals Mission to succeed, New Delhi will have to find ways to leverage its existing partnerships with countries in Africa, a region that houses 30% of the world’s known critical mineral reserves.
A familiar geography for Indian enterprise, New Delhi shares deep political, economic, and historic connections with the continent, with wide commercial networks created by a three million strong diaspora. Described by External Affairs Minister S. Jaishankar as the “land of the future”, the recognition of Africa’s importance in advancing global priorities is reflected in New Delhi introducing new diplomatic missions in Africa.
Collaborating on critical minerals will bring in a new dimension to the multifaceted energy partnerships between the regions. Of the total bilateral trade of $98 billion in 2022-23, $43 billion is attributed to the mining and mineral sectors. Similarly, a significant portion of the $75 billion that India has already invested in Africa, is by public sector units for the acquisition of energy assets. India sources approximately 34 million tonnes of oil — accounting for 15% of its total demand — from Africa, alongside rising imports of natural gas, minerals, and mineral fuels. Further, as part of the International Solar Alliance, the Government of India has benchmarked $2 billion for solar projects in Africa. Building resilient supply chains to Africa is being imagined at a time when African governments are employing an array of policy instruments to diversify away from a ‘pit-to-port’ model. Tanzania is developing a multi-metal processing facility, Zimbabwe and Namibia have banned the export of raw minerals to ensure value addition and Ghana has approved a new policy for the exploitation and management of green minerals. The forthcoming African Green Mineral Strategy champions ideas for Africa’s minerals-based industrialisation. This presents opportunities for India to support a developmental agenda.
China factor
Increasing international attention, especially the extent of control China exerts over the value chain, poses economic and security risks for India. With its early acquisition of assets, development of processing and manufacturing capabilities, Beijing enjoys enormous influence. Chinese mining companies have a significant presence in cobalt mining in the Democratic Republic of Congo and recently signed a $7 billion ‘minerals-for-infrastructure’ deal.
Opportunities for collaboration
In this geopolitically fraught environment, where the African agency is looking to build viable alternative partnerships, there are some unique advantages that India could leverage.
Indian construction companies have completed several projects in 43 African countries, which include transmission lines in Tunisia, hospitals in Tanzania, and railway lines in Ghana. In the African critical minerals landscape, identifying strategic projects with host countries and building mining-adjacent infrastructure are key to development.
India has signed memoranda of understanding with Zambia and Zimbabwe for cooperation in geological mapping, mineral deposit modelling, and capacity building. To help build a critical mineral workforce, utilising mechanisms such as the Indian Technical and Economic Cooperation, which has trained 40,000 Africans in 10 years, would help drive positive energy partnerships.
There is an increasingly nuanced role of Indian technology start-ups across the mining value chain. From innovating tools that accelerate mining exploration and extraction while minimising ecological impacts, to utilising technology for beneficiation of mineral ores, and providing reconnaissance services, there is a whole suite of services that private technology companies provide. Their expertise in niche areas of mining brings an element of value addition that African governments could explore.
On African priorities, Marit Kitaw, Director of the African Minerals Development Center said, “the only way to transform lives is to add value”. Therefore, India’s Critical Mineral Mission should prioritise responsible practices in an era that threatens to be dominated by the geopolitics of a not-so-green energy transition.
Veda Vaidyanathan is Associate Fellow, Centre for Social and Economic Progress, New Delhi
Published – September 06, 2024 12:08 am IST
