Identification of and collection of data on such reserves may attract investments for sustainable extraction
Published Date – 26 July 2024, 11:53 PM
By Prajna Paramita Mishra, Ch Sravan
One of the focus areas of the Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, was critical minerals, in recognition of the looming climate crisis and exponential rise in energy requirements. It was announced that the Customs duty on critical minerals will be waived to ensure an enhanced supply of these minerals and eventually pave the way towards achieving self-sufficiency in them.
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Cutting half of the greenhouse gas emissions by 2030 and achieving net zero emissions by 2050 have become globally imperative. While thinking about the global transition to renewable energy, various clean energy technologies like solar panels, wind turbines, power lines and batteries for electric vehicles require a lot of minerals. The demand for minerals is now shifting to a subset that includes nickel, cobalt and lithium. These critical minerals, also known as energy transition minerals, are crucial components of today’s clean energy.
Nickel, cobalt and lithium are important components of electric vehicles’ batteries. Aluminium and copper are used in substantial quantities in power transmission lines. Rare earth elements are used as a part of the magnets that operate electric motors and turn wind turbines. Space, defence, telecommunications and high-tech electronics are some of the other sectors in which these minerals are in high demand. Critical mineral resources are thus crucial for a nation’s security and economic development.
IEA Findings
The World Energy Outlook Special Report (2022) by the International Energy Agency (IEA) asserts that the narrow geographical concentration of critical minerals in a few select countries may lead to concerns regarding consistent reliability and sustainability in the global supply chain, thus putting import-dependent countries like India at risk. Moreover, the challenges in the global supply chain of these minerals are not restricted to the scarcity aspect alone but also extend to the production and extraction costs, waste volumes, and stress on climate and water, depending on the type of mineral.
Simultaneously, it is also claimed that the market for these minerals is potentially huge; with the right policies, the critical minerals sector can create jobs and help reduce poverty. With the adoption of a circular economy, critical minerals with higher recyclable potential can be identified, helping in the preservation of the global mineral stock. In this regard, a report from Europe’s Metals Association (2022) adds to the contributions of metals recycling towards the mitigation of many of the environmental and social risks from new primary metals production. However, this outcome depends on strong international cooperation, which can provide the necessary push for companies to identify and address supply chain concerns, given the resource gaps among countries.
Indian Scenario
A report by the Ministry of Mines (2023) points out that a total of 30 minerals are critical for India’s development. Of these, 17 minerals have economic importance despite being associated with supply risk, while 14 critical minerals are listed to be of interest to the Ministry of Power in terms of providing energy security. These include cobalt, nickel, lithium and copper. Many of these minerals are found in land-locked developing countries, parts of which are the world’s least developed regions.
The report stresses the need for the preservation of the reserves of these minerals, which may contribute to lowering India’s current 100% import dependency on them. Import reliance is a major factor within the broader bubble of supply risk concerning India’s critical minerals. Such a heavy import reliance cannot withstand sudden export restrictions from the major producers, should that eventuality ever occur.
In this context, it is essential to note that India’s emphasis on self-sufficiency in critical minerals would be inadequate without understanding the distribution of such reserves. Natural resource economics classifies the stock of depletable resources as current reserves, potential reserves and resource endowment. Current reserves are known resources that can be extracted profitably at current prices. Potential reserves are the quantity of additional reserves that can be recovered by enhanced recovery techniques, given that people are willing to pay for these resources. Both these concepts are rooted in economics.
However, resource endowment is geological, representing the natural occurrence of a resource in the earth’s crust. Limited information on the distribution aspect necessitates a detailed exploration of the country’s existing resource endowment of critical minerals across States, followed by an assessment of their current and potential reserves. The identification of and collection of data on such reserves may help attract investments directed towards the socio-environmentally sustainable extraction of these minerals.
Telangana-specific
In the context of Telangana, recently, the Union Minister of Coal and Mines launched a Mineral Exploration Hackathon in Hyderabad, in addition to a roadshow on critical minerals. The main aim of the hackathon was to promote the use of modern technologies like machine learning and artificial intelligence in mineral exploration. The roadshow focused on industry engagement and making the potential bidders aware of the e-auction process conducted by the Ministry.
The Department of Mines and Geology, Government of Telangana, has given the details of district-wise minerals for both major and minor minerals. In that list, 15 districts of the State possess major minerals such as coal, limestone, iron ore and manganese. Almost all the districts possess at least five minor minerals such as quartz, granite, gravel and morrum. However, the State is not very rich in critical minerals, according to the Indian Minerals Yearbook (2022). A Geological Survey of India’s report on Telangana shows that of the 30 critical minerals, the State is endowed with only four. They are copper and graphite in Khammam, molybdenum in Karimnagar and Medak, and tungsten in Mahbubnagar. Amid the ongoing coal auction debate in the State, it is imperative that the mining potential of these critical minerals be explored.
Some Concerns
There are also concerns that the development of these critical mineral projects will lead to a global decarbonisation divide. Given that their geographical endowment is concentrated in the Global South, a land of Indigenous people, there are apprehensions related to the social, cultural and environmental impacts of this transition. Academic research has already hinted at this transition as an expansion of the existing extractive industry towards another set of minerals and across regions.
On the one hand, it can help usher in clean energy. On the other, the urgency and the scale of demand can lead to resource plundering, environmental destruction, human rights violations and geopolitical tensions. There is a need for empirically rich studies on the socio-economic-environmental impacts of the mining of critical minerals, both at the State and the national level.
(Prajna Paramita Mishra is Associate Professor and Ch Sravan is Doctoral candidate, School of Economics, University of Hyderabad)
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