Aug 06, 2024
CRITICAL MINERAL POLICY: AIMS AND PERFORMANCE
1. What is the Critical Mineral Policy?
India’s Critical Mineral Policy aims to enhance the exploration, production, and processing of critical minerals, such as lithium, cobalt, and rare earth elements, which are essential for various high-tech industries, including renewable energy, telecommunications, and electric vehicles. The policy focuses on reducing India’s dependence on imports of these vital minerals, particularly from dominant suppliers like China, and ensuring a steady domestic supply to support the country’s industrial and technological growth.
2. Aims of the Critical Mineral Policy:
• Self-Sufficiency: To reduce reliance on imported critical minerals by increasing domestic exploration and production.
• Strategic Reserves: To secure and develop strategic reserves of critical minerals for national security and economic stability.
• Support for High-Tech Industries: To provide a reliable supply of critical minerals for industries such as renewable energy, electric vehicles, telecommunications, and nuclear energy.
• Economic Development: To boost local economies and create jobs through mining and processing activities.
3. Policy Implementation and Auction Performance:
The Indian government has initiated the auctioning of critical mineral blocks to encourage private sector participation in exploration and mining. So far, four tranches of auctions have been conducted:
• First Tranche: 20 blocks auctioned, with 13 canceled due to insufficient bids.
• Second Tranche: 14 critical mineral blocks auctioned, with weak responses leading to cancellations.
• Third Tranche: 38 blocks auctioned, including a lithium block in Jammu and Kashmir, with cancellations due to limited bids.
• Fourth Tranche: 21 critical mineral blocks put up for auction in the latest round.
Despite these efforts, the auctions have faced challenges, including insufficient bids and cancellations. Key issues include the commercial viability of mining projects, the current state of technology, and the nature of mineral reserves. The recent cancellations highlight the industry’s reluctance to invest in the early stages of exploration and development, particularly for minerals like lithium, which require significant investment and long lead times to become commercially viable.
4. Challenges and Industry Response:
• Viability Gap Funding: There is a demand for government support in the form of viability gap funding to make mining projects more attractive to investors. This funding could help cover the initial costs and risks associated with developing new mines.
• Custom Duty Waivers: The government has exempted 25 critical minerals from import duties to encourage the growth of domestic energy storage capacity and mitigate supply chain issues in scaling up renewable energy. However, this measure is seen as a short-term solution and does not address the need for long-term self-sufficiency.
5. Future Outlook and Policy Adjustments:
The government is actively exploring ways to improve the attractiveness of its critical mineral auctions. Efforts include increasing transparency regarding the size and quality of mineral blocks, conducting beneficiation studies to assess extraction feasibility, and accelerating exploration activities, particularly in regions like Jammu and Kashmir, where significant lithium deposits have been identified.
Union Minister of Coal and Mines, G Kishan Reddy, has emphasized the importance of fast-tracking exploration and auction processes to enable mining projects to commence as soon as possible. The government aims to complete exploration work and start mining operations to meet the growing demand for critical minerals in sectors such as energy storage, electric vehicles, and consumer electronics.
Conclusion:
India’s Critical Mineral Policy aims to secure essential minerals for the country’s industrial and technological needs. While the policy has faced initial challenges, including low participation in auctions and concerns over commercial viability, the government continues to refine its approach. Efforts are underway to provide financial support, improve data transparency, and accelerate exploration, with the ultimate goal of reducing dependency on imports and establishing a robust domestic supply of critical minerals.
SRIRAM’s
