Energy transition: India remains highly dependent on imports of critical minerals

GS Paper III Economy

The Institute for Energy Economics and Financial Analysis (IEEFA) report reveals India’s heavy reliance on imports for critical minerals.

About IEEFA

The Institute for Energy Economics and Financial Analysis (IEEFA) is a non-profit organization that studies energy markets, trends, and policies.
IEEFA’s mission is to accelerate the transition to a sustainable, profitable, and diverse energy economy

Import Dependency: India remains highly reliant on imports for critical minerals, especially lithium, cobalt, and nickel, with a full (100%) dependency on foreign supplies for these key resources.
Import Strategy & Trade Risks: The report emphasizes that India needs a strategic import plan to mitigate trade risks and maintain international partnerships for essential mineral security.
Key Minerals Assessed: IEEFA examined India’s status in importing and securing five critical minerals—cobalt, copper, graphite, lithium, and nickel—highlighting the country’s 100% reliance on imports for several of these, primarily from limited global sources.

The Union Finance Minister of India, announced the creation of Critical Mineral Mission for sourcing mineral resources beneficial to the nation’s economy.
Mission Objectives: Emphasise the development of the new capacities, the recycling of critical minerals and incentivising the acquisition of overseas assets.
Legal Framework: The Mines and Minerals (Development and Regulation) Act of 1957 was amended in 2023 to remove six minerals from the atomic list and open it for exploration for private sectors.

Diversification of sources: The report advocates for identifying new resources globally, expediting domestic production, and forging partnerships with mineral-rich countries like Australia, Chile, Ghana, and South Africa to diversify supply.
Graphite Imports: India heavily relies on China for synthetic and natural graphite and could consider partnerships with top-producing nations like Mozambique, Madagascar, Brazil, and Tanzania, particularly under Global South cooperation.
Copper and Nickel Sourcing: With India’s imports of copper cathodes and nickel sulfates concentrated from Japan and Belgium, diversifying suppliers, such as considering the U.S. (a major copper producer), may enhance supply stability.
Lithium & Nickel Oxides: Current imports are less concentrated but largely sourced from Russia and China, posing potential trade risks.
Domestic Refining & Processing: Increasing domestic refining capacity, especially for lithium, could enable India’s integration into the global supply chain.
- This includes government-backed initiatives like auctions for critical mineral mining blocks and support for refining technology.

Definition of Critical Minerals: These minerals are essential for national security and economic stability and are used across industries like electronics, defense, energy, and healthcare, supporting India’s industrial growth and technological advancements.
China’s Dominance: China is the leading global supplier for six of the twelve minerals identified as crucial for India by 2030.

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