Author: Anusha Arif
Background
Mineral exploration and identification play an important role in national security, and are also essential to modern industrial growth. Most countries push for exploration and processing of minerals to ensure the military’s technology edge, secure manufacturing supply chains, and pursue sustainable development practices. In June, 2023 India’s union ministry of Coal, Mines & Parliamentary affairs unveiled the first report on ‘Critical Minerals for India,’ with a comprehensive list of critical minerals found in the country. The list of thirty minerals included minerals like antimony, beryllium, bismuth, cobalt, copper, gallium, germanium, graphite, hafnium, indium, lithium, niobium.
The list of minerals found in the country makes it clear that India is a mineral rich country. The Geological Survey of India (GSI) had found in 2023 that Jammu’s Reasi district may have 5.9 million tonnes of lithium deposits, which may be a game changer for the country amid the global push for battery operated electric vehicles. India remains export dependent for a lot of its mineral resources. Between 2017 to 2023, India procured 50,000 tonnes of amorphous graphite from China, in addition to cobalt oxide, nickel oxide, and hydroxide. India also depends entirely on imports for lithium and cobalt needs. The mining of critical minerals in India has become axial in securing the critical mineral supply chains and exploring alternative energy technologies.
As net-zero emission promise dates approach, the countries are gearing up for sustainable growth for technology and manufacturing advancement, for which, natural resources are crucial. In addition to this, India has recently aligned itself with the Mineral Security Partnership joined by major economies such as the United States (US), the United Kingdom (UK), and the European Union (EU), in a shared objective to make their critical mineral supply chains more robust and reduce the dependence on sources like China.
The exploration and mining of critical minerals is governed by the Mines and Minerals (Development and Regulation) Act. Primarily, the country has heavily depended on imports of minerals from China, Japan and South Korea and has not yet made efforts to extract them before.
Mining in India remains a sector dominated by public sector companies; however, in its endeavour to explore its potential of critical minerals, the Union government made advanced payments to private companies to scout for critical minerals.
Environment Impacts
As the demand for critical minerals booms, the global efforts to fight climate impacts present an equal challenge to be met. The push behind critical minerals also stems from the vital role it can play in clean energy transition; however, the mismanagement of the production and processing of minerals can have several negative consequences on the environment.
One way to look at the critical mineral supply chain environment impacts is to say that it can cause short term loss for a greater gain; however, loss of biodiversity and emission of greenhouse gases may not be as temporary as anticipated.
Since the extraction of critical minerals remains a new domain for India, the only way to anticipate the environmental impact of such practice can be to look at the impacts of the mining sector in general. Mining and processing are not only energy intensive activities, but they can also be water intensive, requiring large amounts of water, cooling machinery, etc. With India climbing the ranks to be one of the top most emission producing countries in the world, it walks a tightrope in meeting its net-zero emission targets. In the Report of the Committee on Identification of Critical Minerals released in June 2023, the Ministry barely touches on any environmental considerations that need to be taken into account with the exploration and extraction of critical minerals in India.
Case in point, lithium has been identified as one of the thirty critical minerals in India. The identified reserves are located approximately 48 kms away from the Line of Control between India and Pakistan, which could pose a security threat for the country; it is also located in the Reasi district of Kashmir which is in itself a fragile ecological zone. A hilly region, the Reasi district, apart from being in a politically precarious region for India, has also grown susceptible to climate change vulnerability; over the last two decades the region has lost a tree cover of 464 ha.
On the other hand, most mineral-rich states such as Orissa, Chhattisgarh, and Jharkhand have been exposed to long-term environmental depletion due to mining-induced deforestation and land-use change. These mining-projects have continued to threaten the lives and livelihoods of the tribal communities. The new critical minerals listed have also been concentrated in some of these regions and are likely to aggravate the environmental depletion in the years to come. Without stringent environmental regulation and unchecked mining activities, the degradation could lead to a catastrophic end.
Legislative and Policy Changes
Time and again India has liberalised the mining policy to account for its mineral requirements. Through the 2008 National Mineral Policy, the country established the role of the state in regulation of minerals, and provided initial planning for survey, exploration, and creating a database for mineral resources in the country.
Following the United Nations Framework Classification for Resources (UNFC) to report mineral resources, the status of exploration and feasibility of extractions for countries, in 2019, the new revised National Mineral Policy focused on promoting domestic industry and importing import dependency as it recognised the importance of valuable mineral resources in the country (PIB, 2023). To take into account the prospective environmental damages that can be caused by mining operations, the Mineral Conservation and Development Rules were framed in 2017. However, the rules exempt petroleum, natural gas, coal, lignite, and minor minerals from its applicability. Under the National Mineral Policy of 2019, the government encouraged private sector investments for exploration activities of the minerals. This agenda was furthered under the Mines and Mineral Bill 2023 and the policy for exploration of critical minerals in India.
Mines and Mineral Bill 2023
The new Mines and Mineral Bill was passed by the Rajya Sabha in August of 2023 to reform the existing act by increasing the exploration and mining of critical minerals that seem essential for the economic development and the national security of the country.
The amendment particularly aims to bring in transparency and empower the central government to exclusively auction the mineral concessions for critical minerals. The amendment also seeks to omit six of the twelve atomic minerals that the original act mentions. However, it is the first time that the mining of minerals such as lithium has been auctioned to private parties. Amid targets for India to meet half its energy needs through renewable energy, the need for battery storage has risen exponentially to meet intermittency challenges. The exploration of these critical minerals through an expedited process can help India fasten the process of reducing import dependency through new legislation.
Impacts of the Private Sector into Critical Minerals
Recognising the need for critical minerals is a high priority effort and the private sector in India represents great opportunity, yet also brings with itself some critical challenges.
One of the major concerns is the environmental impact with the escalated mining activity as it contributes to ecological degradation, pollution and displacement of communities. This is particularly relevant for critical minerals such as lithium, which are crucial for green technologies and battery storage, but often involve environmentally intensive extraction processes.
The government issued Notice Inviting Tenders (NIT) for 20 blocks spread over eight states. The Mining License (ML) has been granted for four of these blocks in Orissa and Tamil Nadu for nickel, copper, graphite, manganese and molybdenum (Walia, 2023). The other 16 blocks are being auctioned for a Composite License (CL), which will allow the licensee to conduct further geological exploration of the area to ascertain evidence of mineral contents .
For the longest time, India has adopted a conservative approach towards mineral exploration; however, under the new amendment, the mining space has been opened to specialised private companies to explore its vast territories. Due to the dominance of the public sector in mineral exploration in India, most private players in India might be disadvantaged in terms of technology and experience to carry on exploration activities. This presents a great opportunity for foreign players who specialise in and have global experience conducting mineral exploration in more liberalised countries such as Australia, Brazil, Canada, etc. But one of the most preliminary concerns that arises is the question of resource sovereignty and the control over strategic reserves.
The entry of foreign players could also lead to a significant portion of profit being repatriated out of India, reducing the potential of economic benefits for the country. They can also prioritise projects that align with their global interests and neglect the strategic needs of the Indian economy. Among the Notified Private Exploration Agencies (NPEAs) for critical and deep-seated mineral exploration projects in December 2023 the government allotted 17 mineral blocks to five companies, with the highest allotted to Gemcokati Exploration which is Maharashtra based company.
Conclusion
The bids for securing critical minerals for each country have reached a watershed moment. India has kept a low profile when it comes to exploration of critical minerals in its territory; however, it has become increasingly important for the country to explore its resources for both economic and security reasons.
The introduction of private players in India’s critical mineral sector is a mixed blessing offering both potential, obvious benefits but also posing significant risks. However, there are substantial and reasonable concerns on matters of resource sovereignty and national interest with the involvement of the foreign players. The risks of overexploitation without adequate environmental safeguard runs high too without a proper regulatory mechanism in place.
Mineral exploration in India, particularly in the critical minerals sector, represents a significant opportunity for economic and technological advancement. With more renewable energy expansions, the need for high-tech applications have increased–minerals are essential for this expansion. The increasing global demand of these minerals could also put India on the map for these undiscovered critical minerals, but this depends entirely on the investment in exploration and securing these for India’s national interest. However, to fully capitalise on this opportunity, it is extremely crucial to have a streamlined and transparent regulatory framework that not only facilitates exploration activities, but also ensures sustainable and responsible mining activities, especially for the private players. This would require strict environmental regulations to prevent ecological degradation and measures to protect the rights and livelihoods of communities residing in mining areas.
In conclusion, while mineral exploration offers significant opportunities that are essential for India and its renewable energy future; it must be approached with a more comprehensive and responsible strategy. This will enable India to not only harness its mineral wealth but also enhance its strategic autonomy and contribute to global and national sustainability goals.
