Mineral Dependency Threatens India’s Green Revolution ICRA

A recent report by rating agency Investment Information and Credit Rating Agency ( ICRA ) has sounded the alarm bells over India’s heavy reliance on imported critical minerals, such as lithium, cobalt, and nickel, crucial for its transition towards green technology.

This dependence poses a significant threat to India’s energy security as it strives to achieve its net zero commitments by 2070. According to ICRA’s analysis on critical minerals, India currently lacks adequate domestic sources for these essential minerals, which could impede its efforts to reduce import reliance in the near future. Despite attempts to boost domestic production through mineral block auctions, the benefits are unlikely to materialise within the current decade, leaving India susceptible to potential supply disruptions. Recognising the challenges associated with exploring deep-seated or critical minerals, the Indian government has initiated the auctioning of exploration licenses to attract specialised overseas mining companies. This strategic move aims to mitigate risks and enhance domestic mineral production, especially considering the escalating demand for green technologies post-COVID.

However, ICRA underscores that the commercialisation of domestic mineral blocks is still in its nascent stages, and the associated benefits may not be fully realised until after 2030. To address this issue, India is actively pursuing international strategies to secure critical mineral assets, including acquisitions in countries like Argentina, Chile, Australia, Zambia, and Congo. On the domestic front, ICRA emphasises the need for incentivising critical mineral processing technologies such as beneficiation and leaching. India’s approach also involves joining global initiatives like the US-led Mineral Security Partnership and implementing regulations such as the Battery Waste Management Rules to promote circular supply chains for minerals.

Despite these efforts, ICRA warns that India’s critical mineral recycling targets remain unmet due to inadequate infrastructure. Developing the necessary facilities for mineral recycling is essential to achieve the government’s ambitious green energy objectives.

ICRA’s report highlights the urgent need for India to address its mineral import dependency to safeguard its green technology transition. Strategic measures, both domestically and internationally, are imperative to enhance domestic production, incentivise processing technologies, and build robust recycling infrastructure to secure India’s energy future.

“Global deposits of critical minerals are more concentrated than most industrial minerals, fossil fuels, and hydrocarbons. Additionally, China dominates the processing and refining of critical minerals, controlling between 65%-100% of the global capacity to make battery grade lithium, cobalt, manganese, and graphite,” Girishkumar Kadam, Senior Vice-President & Group Head, Corporate Sector Ratings, ICRA, said.