Minerals Security Partnership

In News

• Recently, India has shown interest in joining the USA-led Minerals Security Partnership (MSP). 

More about the partnership

• Minerals Security Partnership (MSP) is a US-led partnership initiative that aims to bolster critical mineral supply chains.
  • The new grouping is aimed at catalysing investment from governments and the private sector to develop strategic opportunities.
• The US and 10 partners — Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea (South Korea), Sweden, the United Kingdom, and the European Commission — have come together to form the MSP. 

Significance

• Critical minerals:
  • Demand for critical minerals, which are essential for clean energy and other technologies, is projected to expand significantly in the coming decades. 
  • The MSP will help catalyse investment from governments and the private sector for strategic opportunities — across the full value chain — that adhere to the highest environmental, social, and governance standards.
• Supply Chain:
  • The new grouping, industry insiders say, could focus on the supply chains of minerals such as Cobalt, Nickel, Lithium, and also the 17 ‘rare earth’ minerals. 
• Alternative to China:
  • The alliance is seen as primarily focused on evolving an alternative to China, which has created a processing infrastructure in rare earth minerals and has acquired mines in Africa for elements such as Cobalt.
  • The partnership is also seen as a part of a global ‘China-plus-one’ strategy adopted post the Covid-19 pandemic that caused massive supply-chain disruptions.
    • What is China Plus One?
      • The strategy is also known simply as Plus One, is the business strategy to avoid investing only in China and diversify business into other countries. 
      • For the last 20 years, western companies have invested in China, drawn in by their low production costs, and enormous domestic consumer markets.

Importance of Rare Earth Elements (REE)

• Electric vehicles:
  • Minerals like Cobalt, Nickel, and Lithium are required for batteries used in electric vehicles. 
  • India is seen as a late mover in attempts to enter the lithium value chain, coming at a time when EVs are predicted to be a sector ripe for disruption.
• Electric appliances:
  • REEs are an essential — although often tiny — component of more than 200 consumer products, including mobile phones, computer hard drives, electric and hybrid vehicles, semiconductors, flatscreen TVs and monitors, and high-end electronics. 
• Battery technology:
  • The year 2022 is likely to be an inflection point for battery technology — with several potential improvements to the Li-ion technology, with alternatives to this tried-and-tested formulation being in advanced stages of commercialisation. 
• For India:
  • India has an ambitious plan to convert a large percentage of its transport to electric, and would require these minerals. 
  • According to the plan, 80 percent of the country’s two- and three-wheeler fleet, 40 percent of buses, and 30 to 70 percent of cars will be EVs by 2030.

Concerns for India

• Dependency issue:
  • If India is not able to explore and produce these minerals, it will have to depend on a handful of countries, including China, to power its energy transition plans to electric vehicles. 
  • That will be similar to our dependence on a few countries for oil.
• No expertise:
  • Industry watchers say that the reason India would not have found a place in the MSP grouping is that the country does not bring any expertise to the table. 
  • In the group, countries like Australia and Canada have reserves and also the technology to extract them, and countries like Japan have the technology to process REEs.

Way ahead

• India must open its rare earth sector up to competition and innovation and attract the large amounts of capital needed to set up facilities to compete with, and supply to, the world.
• The better move forward might be to create a new Department for Rare Earths (DRE) under the Ministry of Petroleum & Natural Gas, drawing on its exploration, exploitation, refining, and regulation capabilities.
• While domestic reforms are awaited, Indian private players can be encouraged to form such junior exploration businesses in the Indian Ocean Region (IOR) to prospect for REEs and feed value-added products into the Indian market. 

Source: TH