UPSC Mains
GS Paper III
Economy & Security
Critical Minerals as the Foundation of Strategic Power
The top three refining countries hold an 86% market share across six critical minerals, with China leading in 19 out of 20 strategic minerals.
Global Processing Gap
China controls 90%+
Looming Shortfall
30% Copper deficit by 2035
National Mission 2030-31
1,200 Projects Targeted
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Context and Background
- Critical minerals have moved from the resource policy margins to the absolute centres of national industrial strategy.
- Minerals like lithium, cobalt, nickel, graphite, copper, and rare earths are foundational to EVs, semiconductors, defence systems, and renewables.
- The global market is highly concentrated: The top three refining countries hold an average 86% market share across six critical minerals in 2024.
- China currently leads refining in 19 out of 20 strategic minerals with an average 70% market share.
- China’s recent 2025 rare earth export controls have created widespread concerns across energy, automotive, defence, and AI sectors.
- The EU Critical Raw Materials Act sets ambitious 2030 benchmarks: 10% domestic extraction, 40% processing, and 25% recycling.
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Key Aspects of Critical Mineral Security
- Supply Concentration Risk: Indonesia dominates global nickel supply, while China dominates cobalt, graphite, and rare earth refining.
- India’s Reserves: India possesses significant reserves of cobalt (44.9 MT), copper (163.9 MT), graphite (211.6 MT), and nickel (189 MT), plus monazite rare earth deposits.
- Import Dependence: Despite domestic reserves, India remains heavily import-dependent for lithium, cobalt, and nickel.
- Strategic Acquisitions: Khanij Bidesh India Limited (KABIL) successfully secured 15,703 hectares in Argentina’s Catamarca province for lithium exploration.
- National Corridors: The 2026-27 Budget proposed specialized rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
Looming Deficits: While lithium appears better supplied near-term, it is expected to enter a deficit by the 2030s. The current copper project pipeline points to a massive 30% supply shortfall by 2035.
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Challenges in India’s Critical Mineral Security
Shallow Exploration
Exploration remains relatively shallow in India, complicated by time-consuming regulatory clearances and challenging project economics.
Processing Bottleneck
India lacks high-purity input facilities, while copper and graphite face severe smelting, purification, and scale constraints.
Midstream Deficit
While India has bulk-mineral experience, it still completely relies on imports for processed, high-purity critical mineral products.
Private Participation Gap
There is limited private investment due to poor geological data availability and highly unpredictable approval processes.
Recycling Limitations
Feedstock, collection systems, and technology for recycling remain limited in the near-term.
China Exposure
Dependence on China for graphite and rare earth processing exposes India to massive supply disruption risks as demand scales rapidly.
To counter these challenges, the National Critical Mineral Mission targets 1,200 domestic exploration projects by 2030-31, domestic production of 15 key minerals, and the strategic acquisition of 50 overseas assets.
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Way Forward for India’s Critical Mineral Strategy
Processing Priority
Make processing and refining a national industrial priority backed by targeted infrastructure and financial incentives.
Private Capital Enablement
Provide better geological data, predictable approvals, and risk-sharing mechanisms to attract necessary private investment.
Strategic Stockpiles
Operationalise strategic stockpiles for critical minerals to buffer the economy against sudden supply disruptions.
R&D Acceleration
Accelerate applied research through industry partnerships to rapidly build domestic high-purity processing capabilities.
Overseas Diversification
Diversify overseas supply through trusted geopolitical partners and multilateral platforms beyond KABIL’s current Argentina focus.
Institutional Framework
Create a coordinated framework with mineral-specific risk thresholds and measurable milestones, integrating recycling into supply planning.
