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Critical Topics and Their Significance for the UPSC CSE Examination on December 24, 2024

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India’s reliance on China for critical minerals

For Preliminary Examination:  Rare Earth elements, Critical Minerals

For Mains Examination: GS II - Governance

Context:

The Ministry of Mines in 2023 identified 30 critical minerals deemed essential for the nation’s economic development and national security. While the report highlighted India’s complete import dependency for 10 critical minerals, it did not fully address a more pressing concern — the extent and nature of dependency on China.

Read about:

Rare Earth Elements

Critical Minerals

Key takeaways:

Is China a Dominant Player?

• China's dominance in critical minerals arises from its vast resource base and strategic investments across the supply chain. As the world’s leading mining nation, China has identified 173 types of minerals, including 13 energy minerals, 59 metallic minerals, and 95 non-metallic minerals.
• In the past year, reserves of key minerals like copper, lead, zinc, nickel, cobalt, lithium, gallium, germanium, and crystalline graphite have grown significantly, backed by $19.4 billion in exploration investments.
• These efforts uncovered 132 new mineral deposits, including 34 major ones. Beyond raw materials, China controls significant portions of the global processing and refining market, handling 87% of rare earth processing, 58% of lithium refining, and 68% of silicon processing.
• Additionally, strategic overseas mining investments and midstream refining capabilities have heightened supply chain dependencies for nations such as India, the U.S., and EU members.

What About China’s Export Controls?

• China employs a calculated strategy in controlling critical mineral exports, targeting materials crucial to Western nations, particularly for semiconductors, batteries, and advanced technologies.
• However, Beijing carefully navigates two constraints: avoiding controls on minerals heavily reliant on Western raw materials and preventing disruptions to its domestic industries or export-oriented sectors.
• This approach was evident in China's 2010 rare earth embargo on Japan, recent restrictions on antimony, gallium, and germanium, and its December 2023 ban on rare earth extraction and processing technologies.

Is India Dependent on China?

India's dependence on Chinese supplies for critical minerals is stark, as import data from 2019 to 2024 shows significant reliance on six minerals with over 40% dependency: bismuth (85.6%), lithium (82%), silicon (76%), titanium (50.6%), tellurium (48.8%), and graphite (42.4%).

• Bismuth, used in pharmaceuticals and chemicals, has limited alternatives, with China accounting for 80% of global refinery production.
• Lithium, essential for EV batteries and energy storage, faces processing challenges despite alternative raw material sources, as China manages 58% of global refining.
• Silicon, critical for semiconductors and solar panels, requires advanced processing te