India Launches Auction of Critical Green Minerals to Secure Supply Chain
India has taken a significant step towards securing its supply chain for critical green minerals by launching its first-ever auction of 20 blocks of strategic minerals. The auction, which comes a day before the start of the COP28 meeting in Dubai, aims to ensure a sustainable supply of minerals like nickel, lithium, cobalt, and rare earth materials needed for India’s green transition.
In September, India used its chairmanship of the G20 to facilitate a consensus agreement on ensuring the availability of these critical minerals within the framework of the market economy and international trade rules. Representatives from key G20 countries, including the United States, European Union, Australia, and Argentina, all echoed the agreement, highlighting the growing importance of securing global supply chains.
However, the challenges facing the world’s green transition are significant. The mining of critical minerals often takes place in dangerous locations, and China’s dominance in processing these minerals has further complicated the situation. The vulnerability of the global supply chain was highlighted when China imposed export restrictions on graphite, a key material in electric vehicle batteries, as a retaliatory measure against the US’s curbs on high-end silicon chips.
Access to critical minerals is crucial for achieving net-zero emissions and transitioning to renewable energy. Unfortunately, China has inserted itself as a key intermediary in the supply chain, giving it the power to manipulate access and hold the world’s green ambitions hostage. According to a study by the Aspen Institute, the top three producers of critical green minerals control over 50% of global production, with China dominating the processing of these minerals.
India, recognizing the strategic threat posed by its reliance on imports for green minerals, has initiated a response on multiple fronts. It is pursuing multilateral solutions at the G20 forum and has engaged in mini-lateral partnerships like the Minerals Security Partnership (MSP). Additionally, India has launched efforts to locate green minerals within its own borders, starting with the recent auction announcement.
While these actions by India are a positive step, the vulnerability of the global supply chain for critical green minerals remains a concern. Projections by the International Energy Agency indicate that China’s dominance in the processing of these minerals is unlikely to be reversed in the next decade. This highlights the need for countries to take proactive measures to secure their supply chains and reduce dependence on a single dominant player.
In conclusion, India’s auction of critical green minerals is a significant move towards securing its supply chain and ensuring a sustainable green transition. However, the challenges posed by China’s dominance and the vulnerability of global supply chains require continued efforts and collaboration among nations to achieve a more resilient and diverse mineral supply network.
