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Policy Brief

India’s Critical Mineral Resources

A Trade and Economic Analysis

Vaibhav Gupta, Karthik Ganesan
July 2014 | Industrial Sustainability & Competitiveness

Suggested Citation: Gupta, Vaibhav and Karthik Ganesan. 2014. India’s Critical Mineral Resources: A Trade and Economic Analysis. New Delhi: Council on Energy, Environment and Water.

Overview

This policy brief examines the supply risk of critical minerals from the perspective of import dependence. A mineral is labelled as critical when the risk of supply shortage and associated impact on the economy is (relatively) higher than the other raw materials. In the analysis, the two dimensional representation of criticality pits economic importance against supply risks. The representative sample comprises 33 minerals, which contribute significantly to the manufacturing sector and accounts for 75 per cent of India’s overall non-fuel mineral import bills. It underlines the importance of these minerals for which India has to rely on the outside world for its supply.

Key Highlights

  • The supply of many mineral resources is constrained due to the lack of suitable technology adoption and inefficient policy mechanisms to drive mining and mineral exploration.
  • India’s annual spending on mapping its reserves over the last three decades has been USD 50 million each year, whereas Australia spends nearly 30 times more than India in mineral exploration activities.
  • Expansion of manufacturing in India and cutting-edge technology assimilation can increase the economic importance associated with the critical minerals.
  • Import dependency is the most critical factor in the determination of supply risk. It also helps in evaluating the areas where suitable interventions would be necessary to avoid a shift to a largely imports dependent scenario.
  • India exports low-value ores (such as iron ore, bauxite and zinc) and the overall exports are nearly USD 40 million.
  • India has a poor vanadium reserve base and must either import the mineral or the finished products.

Economic Importance versus Import Dependency on Minerals

Economic Importance versus Import Dependency on Minerals

Source: CEEW analysis

Key Recommendations

  • Prioritise security for critical mineral resources as they have numerous monetary and long-term advantages.
  • Assist Indian policymakers to focus on areas where India needs to enact coherent policies and make smart investments. This will ensure uninterrupted mineral supply to the required industry.
  • Dedicate business-friendly policies as this would encourage mineral companies to increase their investments in India and bring in international best practices to the manufacturing sector.
  • Increase the mining activities as this could directly benefit the manufacturing sector.
  • Encourage the research community to explore the options to substitute critical minerals in current and upcoming applications.
  • Conceptualise economically viable and environmentally friendly mineral beneficiation technologies, and technologies for extraction of secondary minerals from the by-products, which are currently discarded.

Import dependency is the most critical factor in the determination of supply risk. It also helps in evaluating the areas where suitable interventions would be necessary to avoid a shift to a largely imports dependent scenario.

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