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Critical and Strategic Minerals UPSC NOTE


Critical and Strategic Minerals

  • The Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023, in a bid to attract private sector investment in the exploration of critical and deep-seated minerals in the country. 

  • The Bill puts six minerals, including lithium,beryllium, niobium, titanium, tantalum and zirconium“critical and strategic” minerals. 

  • The exploration and mining of these six minerals, previously classified as atomic minerals, were restricted to government-owned entities.

  • Critical Minerals: Critical minerals are natural resources that are essential for various industries, including technology, manufacturing, and clean energy. E.g., Lithium, nickel, cobalt etc.

  • Deep-Seated Minerals: Deep-seated minerals refer to minerals that are found deep within the Earth’s crust and are typically more challenging and costly to explore and mine compared to minerals closer to the surface. E.g., Gold, Copper, Diamonds etc.

  • Strategic minerals: They are essential for the defence and strategic makeup of the state. E.g.,  Sulphur, Lead,Petroleum,Zinc, Mercury etc.

Importance of critical minerals

  • For creating fuel,  manufacturing, infrastructure, and advancement.

  • The clean energy transitions of India, seeking to meet their net-zero emission goals, are contingent on the availability of critical minerals such as lithium, which has also been called ‘white gold’, and others including cobalt, graphite, and rare earth elements (REEs). 

  • These are also crucial for the manufacture of semiconductors used in smart electronics; defence and aerospace equipment; telecommunication technologies and so on.

  • The lack of availability of such minerals or the concentration of their extraction or processing in a few geographical locations leads to import dependency, supply chain vulnerabilities, and even disruption of their supplies. 

  • For instance, China has majority ownership of cobalt mines in the Democratic Republic of Congo, where 70% of the world’s cobalt is mined.

  • China also has by far the largest amount of reserves of REEs of any country in the world, followed by Vietnam, Brazil and Russia.

  • Major economies including the U.S., U.K., and the European Union in the recent past have moved to secure supply-chain resilience for such minerals and to reduce reliance for their availability on countries like China.

  • The Ministry of Mines, India came out with a list of 30 minerals critical to the country’s economic development and national security.

  • However, India is highly dependent on imports for a majority of minerals on this list. 

  • India is 100% import-dependent on China, Russia, Australia, South Africa, and the U.S. for the supply of critical minerals like lithium, cobalt, nickel, niobium, beryllium, and tantalum.

  • Also for deep-seated minerals like gold, silver, copper, zinc, lead, nickel, cobalt, platinum group elements (PGEs) and diamonds.

  • For instance, in 2022-23, India imported close to 12 lakh tonnes of copper (and its concentrates) worth over ₹ 27,000 crore as per official figures.

Why is private sector vital for critical minerals exploration?

  • India’s unique geological and tectonic setting is conducive to hosting potential mineral resources and that its geological history is similar to the mining-rich regions of Western Australia and Eastern Africa.

  • Notably, it is estimated that India has explored just 10% of its Obvious Geological Potential (OGP), less than 2% of which is mined and the country spends less than 1% of the global mineral exploration budget. 

  • Not many significant mineral discoveries have taken place in the country in the last couple of decades and a majority of exploration projects have been carried out by the government agency Geological Survey of India and other Public Sector Undertakings (PSUs) like Mineral Exploration Corporation Limited (MECL), with very little private sector participation.

  • Private-sector could only get licences to further prospect and mine resources that had been explored by a government entity. 

  • Companies also saw a lack of adequate incentives.

  • Exploration requires techniques like aerial surveys, geological mapping, and geochemical analyses and is a highly specialised, time-intensive and monetarily risky operation with less than 1% of explored projects becoming commercially viable mines.

  • Union Minister of Mines pointed out that while Indian PSUs were in a relatively better position to explore surficial and bulk minerals like coal and iron ore.

  • Indian PSUs had not fared well when it came to deep-seated and critical minerals owing to the high expenditure and long duration of risky projects while being under pressure to increase the supply of bulk minerals. 

  • The new Bill seeks to bring exploration processes in India at par with that of developed countries by getting private sector capacity into exploration (Example in Australia).

  • In Australia and multiple other jurisdictions globally, private mining firms called junior explorers, engage in risk-taking by putting their expertise and limited financials into explorations to find potential mines. 

  • Once discovered, these private companies can sell these to bigger mining companies who then develop and run these mines. 

  • This helps multiply exploration projects and accelerate the pace of exploration owing to private participation.

Is India’s mining policy conducive to private participation?

  • The Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957, the primary legislation governing mining in the country.

  • It has been amended several times since its enactment including recently in 2015, 2020, and 2021. 

  • Amending the Act in 1994 to allow interested parties to apply for mineral concessions through a First Come First Served (FCFS) basis. 

  • Later, private companies could also get Prospecting Licences (PL) or Mining Leases (ML).

  • They could even apply for early-stage or greenfield exploration through Reconnaissance Permits (RPs).

  • In the early 2010s, as the mining industry seemed to be gathering momentum, concerns about favouritism and misuse started coming up in the allocation of 2G spectrum and natural resources like coal blocks and the Supreme Court intervened.

  • In 2015, the MMDR Act was amended to allow private companies to participate in government auctions for Mining Leases and Composite Licences (CLs). 

  • However, due to the Evidence of Mineral content (EMT) rule, only government-explored projects were auctioned, limiting private sector involvement. 

  • The amendment also permitted private firms to register as exploration agencies, with the National Mineral Exploration Trust (NMET) funding for G4 to G1 exploration, but private participation remained limited.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Critical and Strategic Minerals UPSC NOTE
Critical and Strategic Minerals UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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