Reimagining Mobility – Securing a Resilient Supply Chain for Critical Minerals
Published on : Friday 15-12-2023
Yash Mahendra dwells on India's journey into the US Critical Mineral Club and the tech revolution.
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clean energy transition.
In an era characterised by a relentless pace of technological advancement and a global surge in mobility solutions, critical minerals are assuming increased importance. A study by the International Energy Agency (IEA) highlights the indispensable role that critical minerals play in helping enable a clean energy transition. The IEA estimates that an electric vehicle (EV) requires 6 times the mineral inputs of a conventional vehicle. This illustrates how critical minerals are the foundation on which modern technology is built. Beyond EVs, everything from solar panels to semiconductors, wind turbines to advanced batteries for storage and transportation, requires a steady supply of critical minerals in the production process. India, with its vision of Atma Nirbhar Bharat, recognises the importance of securing a sustainable and resilient supply chain for listed critical minerals. The availability and accessibility of these minerals not only influence the trajectory of technological progress but also play a pivotal role in determining the geopolitical dynamics of India with other global powers.
The Tech and Mobility Boom: A Global Perspective
The global surge in technological advancements has ushered in a new era of mobility. Electric vehicles, in particular, have become emblematic of a sustainable future, promising reduced carbon footprints and cleaner transportation. To this end, India has set ambitious goals of shifting towards sustainable mobility through large, reliable fleets of electric public and private transport, aiming for 30 percent electrification of the country's vehicle fleet by 2030.
A critical aspect of such lofty goals is the global dependency on a select group of minerals deemed essential for the manufacturing of high-tech products. These critical minerals include rare earth elements, lithium, and cobalt, among others. The interconnectedness of nations in securing a sustainable supply chain for these minerals has brought to the fore the necessity of international collaboration and strategic partnerships.
Recognising the strategic importance of critical minerals, the United States has compiled a Critical Minerals List. This list outlines minerals crucial for technology, defense, and renewable energy sectors. The list is periodically updated and had 50 minerals including lithium, when it was last published in 2022. The dependence on these minerals, however, is not limited to the US; it reflects a global reality where nations are interlinked in their quest to secure these resources for sustained technological and economic growth.
India's Strategic Imperative
Based on a three-stage assessment process, India has identified 30 critical minerals and rare earth elements needed to fulfill its clean energy ambitions. The nation is actively working to establish a resilient and varied critical mineral supply chain to support its ambitions in green technology.
China maintains a dominant position in critical mineral mining, processing, and manufacturing which results in 75% of the global EV battery demand being fulfilled by China. However, the geopolitical realities of today urge India and other nations alike to build a more diversified and resilient supply chain. This is an issue of immediate importance for India as the country relies exclusively on imports for critical minerals such as lithium, nickel and cobalt.
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is a global endeavor.
The US Critical Minerals Club: Entry and Implications for India
In response to the critical nature of these minerals, India has taken a significant step by joining the US-led Critical Minerals Club. Officially termed as Minerals Security Partnership (MSP), the club is an American-led collaboration of 14 countries. The MSP's goal is to increase public and private investment in critical mineral supply chains globally. Australia, Canada, Finland, France, Germany, Japan, Republic of Korea, Sweden, United Kingdom, and the European Commission were the founding members of the club. India stands as the only developing nation to be a part of the strategic organisation. As per Geoffrey Pyatt, the US Assistant Secretary of State for Energy Resources, India brings a unique credibility to the MSP by being a major global economy while still being in the developing phase.
India’s inclusion in MSP is expected to pave the way for equitable sharing of resources across the globe. A closer partnership with a global leader such as the United States will help enable diversified private sector investment and catalyse public sector financing for critical minerals from an Indian viewpoint. Being able to secure the supply chain of critical minerals will also provide India with the necessary impetus to move forward with concerted indigenous electronics and semiconductor manufacturing facilities.
The move not only strengthens India's technological prowess but also enhances its geopolitical standing as India’s inclusion can set a precedent for other countries to be part of the partnership and reduce their collective dependence on China.
Securing the Supply Chain: India's Approach
Although India has uncovered nearly 6 million tonnes of lithium deposits, the nation is proactively developing its capabilities in extraction, processing, manufacturing, and recycling to harness this valuable resource for sustainable growth. To address this, India has strategically focused on joining hands with countries beyond the US as well in order to gain better technical expertise for each stage of the value chain.
A prime illustration of this is the Australia-India Critical Minerals Investment Partnership which aims to build new supply chains for critical minerals processed in Australia. The partnership will help India reduce emissions from its energy network and become a global manufacturing hub.
At the same time, India has not lost sight of the environmental impact of extracting and processing these minerals. It has joined the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), which is a global venue for discussions on the sustainable management and development of the mining sector. The IGF supports national governments to advance good mining governance for the betterment of communities, economies, and the environment.
To ensure a sustainable supply chain of critical minerals, strengthening international cooperation, improving mineral governance, adopting a circular carbon economy and mobilising finance and investment should be the focus areas going ahead.
Ethical sourcing in this context adds another layer of significance, emphasising the humane treatment of workers and communities involved in the mining supply chain. By prioritising fair labor practices and community engagement, ethical sourcing not only safeguards human rights but also fosters long-term stability in the regions where critical minerals are extracted.
Challenges and Future Considerations
Despite the multitude of opportunities, India needs to strike a delicate balance between economic growth, environmental sustainability, and geopolitical dynamics which requires careful navigation.
Achieving success in fortifying global supply chains requires collaborative efforts and investments from both the public and private sectors across the entire value chain. This entails efficient project development, collaboration with like-minded partners and the implementation of a global engagement strategy. Significant breakthroughs contributing to the availability of alternative materials and cost reduction are expected to come from advancements in science and technology, helping build sustainable critical minerals supply chains.
To aid continued progress, public awareness and perception become crucial as well. The government's communication strategies play a pivotal role in addressing concerns and highlighting the benefits of joining the MSP and partaking in other collaborative efforts. Transparency is the lynchpin in building public trust, ensuring that the narrative around India's future is one of progress, collaboration, and strategic foresight.
Conclusion
The reimagining of mobility and technology is not just a national but a global endeavor. As India positions itself at the forefront of this revolution, the implications resonate far beyond its borders. The most critical aspects in the future of critical minerals are of innovation, sustainability, and collaborative progress.
Yash Mahendra is Vice President (North America) for Singapore-based B2B procurement platform Moglix.
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