India’s Mineral Diplomacy

Syllabus: GS2/ International Relations

In Context

• India, as a major importer of critical minerals, is focusing on strengthening its mineral security to support its manufacturing and technological growth while reducing its dependence on countries like China.

About

• In a response to a question in the Parliament, the Indian government stated that the country is fully dependent on imports for its lithium requirements, with China alone accounting for 70 to 80 percent of India’s lithium and lithium-ion imports. 
• India is also dependent on China for meeting 60 percent of its natural graphite imports. Both are extremely crucial for the battery and Electric Vehicle (EV) industry. In addition, India’s reliance on imports for cobalt, nickel and copper is between 93 to 100 percent.
• In the FY 2023-24, India spent over INR 34,000 crores on importing these four minerals.

Pillars of India’s Mineral Diplomacy

• International Engagement and Strategic Partnerships: Partnering with resource-rich countries like Australia, Argentina, Russia, Kazakhstan, and USA to secure lithium, cobalt, and other critical minerals. The establishment of KABIL (Khanij Bidesh India Ltd.) is a key step in this direction.
  • Key Developments:
    • Australia: Agreement for two lithium and three cobalt projects.
    • Argentina: $24 million pact for lithium exploration in 2024.
    • Kazakhstan: Joint venture for titanium slag production.
  • The US-led Mineral Security Partnership (MSP) established in June 2022 addresses four major critical minerals challenges by firstly, “Diversifying and stabilising global supply chains; secondly, investment in those supply chains; thirdly, promoting high environmental, social, and governance standards in the mining, processing, and recycling sectors; and fourthly, increasing recycling of critical minerals”.
• Multilateral Initiatives: India is also engaging with multilateral forums like  Quad, Indo-Pacific Economic Framework (IPEF), Mineral Security Partnership (MSP), and G-7 for sustainable critical mineral supply chains.
• Knowledge Sharing and Capacity Building: Engagement with global partners like the EU, South Korea, and Australia to adopt global best practices across the upstream, midstream, and downstream segments of the supply chain.

Challenges in Mineral Diplomacy

• Limited Private Sector Participation: Lack of a clear policy and road map for private sector involvement. Since November 2023 the ministry of mines has carried out four rounds of auctions totalling 49 critical mineral blocks. But most of the mineral blocks have remained unsold due to insufficient number of bids.
  • Absence of a supply chain strategy to de-risk investments.
• Lack of Process Technology: The lack of response from the domestic mining industry could be attributed to various reasons, prominent among them is the unavailability of extraction and processing technologies within India, thus making India completely dependent on imports from China.
  • Critical minerals which are available deep underground such as cobalt, lithium, nickel, and copper are difficult to explore and mine as compared to those available closer to the surface.
• Weak Diplomatic Capacity: Need for a dedicated mineral diplomacy division within the Ministry of External Affairs.
  • Lack of specialized positions for mineral diplomacy in diplomatic missions.
• Insufficient Sustainable Partnerships: Requires building trusted, long-term partnerships with strategic allies like the EU, South Korea, and Quad members.

Way Forward

• Enhanced Private Sector Role: Develop a clear strategy and incentives to encourage private sector investment in mineral exploration, processing, and technology development.
• Strengthened Diplomatic Engagement: Invest in specialized diplomatic capacity and expertise to effectively negotiate mineral deals and build strong partnerships.
• Comprehensive Strategy: Formulate a national critical mineral strategy that outlines clear goals, priorities, and a roadmap for achieving mineral security.
• Sustainable Practices: Prioritize sustainable and responsible sourcing of critical minerals, adhering to environmental and social standards.

Source: TH