Executive summary

Critical Energy Transition Minerals (CETMs) are essential for clean energy technologies such as solar panels, electric vehicle batteries, and the grid, playing a crucial role in India’s clean energy transition. The resilience and sustainability of supply chains are key considerations in today’s global economy, especially as industries and governments strive to meet ambitious climate targets.

However, concentrated value chains and under-investment in CETM development have led to high price volatility and potential supply disruptions, posing significant manufacturing challenges for low-carbon technologies. Instances such as Indonesia’s unprocessed nickel ore export ban, China’s Covid-19 lockdown, and the Russia-Ukraine war have all adversely impacted the supply chains of specific critical minerals.

India has set ambitious targets for renewable capacity additions and electric vehicle deployment, along with the intent to become self-reliant (Atmanirbhar) in the manufacture of these clean energy technologies. However, it does not have enough reserves of these minerals to meet the projected demand for clean technologies.

Besides, the global production of many CETMs is concentrated in a few countries with significant geological endowments. For example, the majority of the world’s lithium is produced in Australia, Chile, and China; cobalt is dominated by the Democratic Republic of Congo; and REEs are primarily mined in China. The lack of domestic resources and processing capacity for these minerals necessitates the formulation of policies aimed at securing reliable and diversified supply chains through international collaborations and strategic partnerships.

Exploration, mining and capital investments in CETMs are on the rise. However, challenges in increasing global capacities persist. A report by S&P Global predicts that the demand for CETMs will outstrip supply by 2024. The geographical concentration of mining operations elevates the risk of supply shortages in the event of disruptions affecting the producing countries. Various other challenges in ramping up production include diversifying mining and processing locations to more countries and ensuring sustainable mining practices.

The demand for CETMs is likely to remain strong with lithium demand being among the highest due to its lack of substitutability for conventional EV batteries. Demand for other minerals also remains high to enable manufacture of green technologies. Their supply constraints are expected to further intensify. Consequently, identifying the major producers of critical minerals becomes pivotal in establishing more resilient CETM supply chains, particularly for minerals with no known resources in India.

This report provides a national roadmap for India to secure CETMs needed for its clean energy transition by addressing immediate and long-term challenges through strategic policy interventions and international cooperation.

The primary objective of this report is to improve awareness across stakeholders involved in the climate and minerals sectors of government, civil society organisations, and industries about the importance of CETMs. While stakeholders have developed a basic understanding of the issue, there is a need for greater knowledge about market dynamics, finance, contracting, environmental and social issues, and institutional frameworks related to CETMs.

The report covers a broad range of topics, including the concept and framework of criticality, the economic importance and supply risks associated with these minerals, and their role in India’s Net Zero transition. The report examines the growing demand for CETMs up to 2050, assesses global and Indian mining capacities, explores the entire value chain from extraction to manufacturing, and highlights the technological and financial aspects of securing CETMs. It talks about existing legislative framework, both in India and in other countries and regions. It also addresses the environmental and social concerns related to mining and offers strategic recommendations for demand signals, international diplomacy, long-term investments, substitution technologies, and material efficiency to improve India’s mineral security and support its sustainable development goals.

The study connects the concentration of CETMs with the needs of low-carbon technology manufacturing, evaluating existing frameworks and proposing one tailored to India’s needs. Six specific minerals—Copper, Lithium, Manganese, Neodymium, Nickel, and Silicon—have been identified for detailed analysis. The study forecasts future demand for low-carbon technologies up to 2050, identifying supply chain vulnerabilities and proposing policy levers for transforming India’s mineral policy landscape.

An in-depth analysis of existing value chains for selected minerals focuses on exploration, extraction, refining, and circularity, identifying geographic concentrations and factors impacting the value chain, such as policy, technology, markets, investments, and ESG considerations. Lastly, the report assesses uncertainties, including global demand, technology choices, geopolitics, security, environmental and labour concerns, and domestic policies.

Here are the recommendations to enhance India’s mineral security for technological and energy advancements up to 2050, through a comprehensive policy framework and strategic initiatives:

Key Recommendations:

• Promoting domestic mineral exploration is crucial for India’s mineral security. Utilising cutting-edge technologies such as remote sensing and automated drilling can significantly improve exploration and extraction efficiency. To attract private investment, it is essential to broaden the scope of Exploration Licenses (EL) and Composite Licenses (CL) and expedite clearance processes while mitigating environmental and social impacts. Additionally, increasing funding for private exploration agencies through the National Mineral Exploration Trust (NMET) and incentivising EL holders will further boost exploration activities.
• Improving domestic processing capabilities is another vital aspect. Supporting the development of processing infrastructure through incentives and streamlined regulations can reduce India’s reliance on external processors and diversify global supply chains. Establishing accredited mineral processing labs in each state will provide technical assistance and ensure adherence to environmental, health, and safety standards, thereby promoting responsible resource management and attracting investment in critical mineral processing projects.
• Promoting international cooperation is essential for securing a stable supply of CETMs. Encouraging exploration and investment in countries with untapped reserves, particularly in Africa, can diversify supply sources. Maintaining strategic stockpiles will help India withstand supply chain disruptions and stabilise prices. Simplifying negotiations and promoting long-term contracts through standardised contracting frameworks will attract investment. Strengthening relations with key countries and participating in multilateral frameworks like the Mineral Security 17 State of the Sector: Critical Energy Transition Minerals for India Volume I Partnership (MSP) will enhance India’s geopolitical influence and access to global resources.
• Incentivising recycling and circularity are crucial for sustainable CETM management. Developing a graded incentive system for recycling efficiency and quality, integrating informal recyclers into the formal ecosystem, and establishing Resource Recovery Parks (RRPs) will facilitate waste exchange and support recycling activities. These initiatives will improve material efficiency, create a viable market for recycled materials, and promote the circular economy.
• Adopting high Environmental, Social, and Governance (ESG) standards is imperative for resilient and reliable mineral supply. Integrating international ESG standards into mining operations will enhance sustainability, transparency, and ease of export. Engaging local communities in decision-making and benefit-sharing will help gain the social license to operate. Implementing digital battery passports will ensure quality and environmental responsibility from production to recycling. Repurposing mining-generated wastelands for productive use will promote sustainable land management and support local communities.
• Promoting innovation through collaboration between academia and industry is essential for advancing CETM technologies. Establishing dedicated platforms for knowledge exchange and incentivising joint research projects will drive innovation and efficiency in mineral exploration, extraction, and processing. Expanding government initiatives like SATYABHAMA (Science and Technology Yojana for Aatmanirbhar Bharat in Mining Advancement) to promote technology transfer and innovation will enhance India’s self-reliance and competitiveness in the critical mineral sector.

Conclusion:

India’s path to achieving self-reliance in the manufacture of low-carbon technologies depends on securing a stable and responsible supply chain of CETMs. While global competition for these resources intensifies, India’s strategic actions can help mitigate risks and position the country as a leader in clean energy technology. Through concerted efforts in domestic exploration, international cooperation, and the promotion of sustainable mining practices, India can secure its mineral future and support its broader energy transition goals, while promoting environmental stewardship and economic growth.