India Must Act on Exploration of Rare Earths, Lithium and Molybdenum

The COP26 meeting on climate change in Glasgow discussed accelerated actions and strategies to achieve the goals outlined in the Paris Agreement, with India committing to increase its non-fossil fuel energy capacity to 500 GW by 2030, reduce the economy's carbon intensity to less than 45% of 2005 levels by 2030, and achieve the goal of net-zero emissions by 2070. The country must therefore take action to mine and explore critical minerals such as rare earths, lithium, molybdenum, etc. for green technologies.

In addition, in 2015, India announced its Nationally Determined Contribution (NDC), which includes reducing its gross domestic product (GDP) emissions intensity by 33-35% in 2030 from 2005 levels. This commitment was revised to a 45% reduction during COP26. Key minerals will play an important role in achieving these targets.

A recent CSEP study assessed the importance of 23 selected non-fuel minerals to Indian manufacturing sector and projected the demand for key minerals such as rare earths, lithium, and cobalt in the manufacture of green technology equipment needed to mitigate climate change.

The study assesses the criticality of each mineral in two ways: economic importance and supply risk. It projects Indian mineral demand for renewable energy generation and electric vehicle manufacturing, consistent with various climate change mitigation targets over the next two decades.

The analysis shows that niobium, lithium, and strontium are of relatively high economic importance. For example, lithium is necessary to make batteries for electric vehicles, while niobium and strontium are necessary to make steel and aluminum alloys. Most minerals are substitutable to some degree, with the exception of niobium and silver, for which there are no good substitutes.

The supply risk is relatively high for yttrium and scandium, followed by niobium and silicon. Silicon is key to the manufacture of solar panels. The rare earth elements of yttrium and scandium have various uses, including alloys, superconductors, and battery technology. With the exception of copper and iron, India does not have the capacity to recover most minerals.

One aspect of Indian future demand for key minerals will depend on the types of clean energy technologies used in the green energy transition and the proportion of domestic manufacturing versus import dependence on each technology. Solar and wind energy will play an important role in Indian clean energy transition, and electric vehicles are being encouraged to reduce vehicle emissions and dependence on fossil fuels.

As India transitions to renewable energy generation and electric vehicles, the demand for several key minerals will increase. For example, copper, manganese, zinc, and indium will be needed for the manufacture of renewable energy generation equipment. Similarly, the shift to electric vehicles will require increasing amounts of various minerals, including copper, lithium, cobalt, and rare earth elements.

However, India does not have any known reserves of nickel, cobalt, molybdenum, rare earths, neodymium, and indium, and the demand for copper and silver is expected to be higher than Indian current reserves.

The results of this projection exercise suggest that the country does not have the capacity to meet its green technology manufacturing requirements through domestic mining alone. Instead, to meet its climate change mitigation policy agenda, it will need to import minerals for domestic manufacturing or import end products.

India has significant resources of nickel, cobalt, molybdenum and heavy rare earth elements, but further exploration is needed to assess economically recoverable resources. The country must also focus on securing supply chains for key minerals and acquiring foreign mineral assets to ensure continued supply.

In addition, the country needs to seriously study and establish a policy framework for self-reliance in clean energy and high-tech equipment by moving quickly to explore and extract key minerals and to establish the necessary investment in the downstream value chain for manufacturing equipment in the country.

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