I

Setting the Stage

Much like the 20th century was characterised by the competition for hydrocarbons, the 21st is being defined by rising demand for strategic or critical raw minerals as the world transitions towards cleaner, greener, digitally-mediatedand technology-enabled growth (see Figure 1). In other words, the world is fast shifting from a fuel-intensive to a material-intensive system.[1] For instance, lithium or “white gold” is an indispensable ingredient of batteries that are powering everything from cell phones to electric vehicles (EVs). According to the World Bank, global demand for lithium could rise anywhere between 13 to 51 times from current levels, depending on battery technology and their update in EVs.[2] Rare earth elements (REEs) are critical inputs for green technologies like solar panels and wind turbines, as well as defence systems, such as laser-guided munitions and high-strength magnets. IEA predicts REE demand could increase between three to seven times by 2040.[3] Multiple technologies are implicated, from permanent magnets, semiconductors and electric vehicles to LEDs, 3D printing and robotics; likewise, multiple manufacturing sectors, from aerospace and defence to electronics and automotive.

Many of these critical minerals are found abundantly in nature but their supply is constrained by highly concentrated geographical production, either in terms of mining or processing, in certain parts of the world (see Figure 2). This concentration gives rise to monopolisation of supply chains of these strategic commodities: attendant bottlenecks are already in plentiful evidence.

The first set of supply chain bottlenecks arise from domestic and geopolitical factors, which increase market uncertainty. For example, recent political unrest in Peru, the second largest copper producer in the world, has put at risk 30% of the country’s production.[4] The Russia-Ukraine conflict immediately raised costs of metals that are key to manufacturing supply chains, including those in high-tech sectors, such as aluminium, nickel, palladium, and vanadium.[5] Indonesia, rich in deposits of tin, nickel, bauxite, and copper, is tightening export rules as it seeks to move up the production chain, which will impact prices, and even lobbied other producers to form an OPEC-like cartel for battery materials during its G20 presidency last year.[6] Chinese export restrictions on REE, tungsten, and molybdenum between 2010 and 2014, before the practice was struck down by a WTO panel, raised REE prices by nearly nine-fold.[7]

China’s control of critical minerals supply chains is of particular concern (see Figure 3). It dominates mining and processing of REEs, cobalt, graphite, lithium, platinum, and more. Its rare earth export ban to Japan following diplomatic tensions in September 2010 brought to the fore the possibility of economic coercion in the critical minerals market. Today, strategic competition between China and the US, occurring in an increasingly vitiated policy environment heightens the prospects of trade weaponisation, further raising the costs of supply dependency, including with respect to critical minerals and materials. The US is the largest importer of REEs from China, and in May 2019, customs data showed a 16% drop in Chinese exports of REEs from the previous month.[8]

A statement made by a spokesperson from China’s state planning agency, the National Development and Reform Commission, also in May 2019, raised more than eyebrows: “If any country wants to use products made of China’s rare earth exports to contain China’s development, the Chinese people would not be happy with that.”[9] Supply chain vulnerabilities exposed by the Covid-19 pandemic and Russia’s “gas blackmail” further serve as contemporary reminders of the risks of over-reliance on any one particular country, and doubly if the country in question is a strategic opponent/competitor. China’s dominant position in rare earth resources has been gradually declining – it accounted for 60% of global REE production in 2021, down from almost 98% ten years ago, and a boom in global REE exploration has decreased its share of global reserves from 50% in 2010 to under 40% in 2020.[10] But it will remain a dominant player for the foreseeable future.

Further complicating availability concerns are technical considerations. Case in point: a lack of existing substitutes and alternatives, as well as expensive technical processing methodologies that are responsible for long lead times for mine development and mineral processing. Lithium, for example, is the 33rd most abundant element in existence, but occurs in very low concentrations and is thus expensive to extract. Rare earth projects are harder still. As per the IEA, the average lead times of the world’s top 35 projects between 2010 to 2019 was over 16 years.[11] Global demand projections already exceed the rate at which new critical mineral sources are being developed. Interestingly, several critical minerals are not directly processed, but are often by-products from the mining and refining of other commodities, effectively lengthening supply chain considerations. Furthermore, recycling rates of critical minerals remain low, recycling processes are also complicated and expensive, and there is a lack of legislation and regulation on this front, if the mineral in question can be recycled at all. Gallium and indium, for example, currently offer no scope for recycling and reuse. These technical sources of supply chain risks will be particularly relevant in the short to medium term, and indicate the necessity to cultivate current sources and sustain current supply chains.

Environmental factors have also acted as barriers to entry in the extraction and refining of critical minerals in the past decades, and will likely continue to limit diversity in supply sources. Production is usually energy-intensive and therefore dependent on polluting fossil fuels. For every tonne of mined lithium, for example, 15 tons of carbon dioxide are emitted into the air.[12] Indeed, both the decline of America’s frontrunner status and China’s rise as a market leader in REEs are partly due to environmental regulation.To this must be added climate change impact. An intense heatwave and drought around the Yangtze river basin in 2020 in southern China led to factories shutting down operations, hitting supplies of polysilicon and lithium. Indeed, a forecasted increase in extreme rainfall in southeastern China, home to the majority of the world’s heavy rare earth production, is expected to cause a drop in production by 2030 by at least 20%.[13]

Lastly, growing demands for sustainability could increasingly affect critical minerals supply in the coming decades. Calls for responsible mining, conflict-free sourcing, and supply chains with adequate “human rights due diligence” for either social ends or political objectives – China’s rise as a market leader is partly due to its willingness to work in countries with weaker governance and internal conflicts – will introduce another bottleneck in existing trade patterns. An acceleration of interest in improving ESG (environmental, social and governance), not only as a response to climate change but also because of an increasing focus on social factors, is being shown in the mining industry,[14] and is of rising relevance to supply chain security.

There is credible concern whether supply can meet demand for minerals and materials used in high-growth and high-end sectors. The issue becomes strategic: the future of domestic growth and development is premised on digital and green transitions that are being fuelled and driven by these critical minerals, and dominance in the supply chains involved means leverage to influence and control these transitions and the global order currently under transition. Power competition in Industry 4.0 – digital, green, and future technologies – already undergirds the search for critical minerals. Scarcity – economic but also political – will drive their supply chain in the coming future.[15]

This situation report looks at how a number of countries/regions are responding to the challenge of sourcing critical minerals and securing their supply chains. There have been over 100 new policies enacted by governments across the world in just the past couple of years, as notes IEA’s Critical Minerals Policy Tracker. The countries/regions selected represent a mix of major economies, key critical minerals producers and consumers, and India’s strategic partners – Australia, Canada, EU, Japan, UK, the US, as well as India itself. This situation report offers comparative summaries of emerging strategies and policies being implemented by these key country stakeholders. These responses will dictate emerging supply and value chains of clean energy and green technologies, and thus trade flows of the 21st century.

Different countries/regions have embraced varying definitions of “criticality” (see Table 1), depending on their mineral wealth, industrial focus, technological strength, and national security concerns, but there is growing acknowledgment of the same set of risks, as detailed above, prompting a focus on collective response (see Table 2). Likewise, while the scale of resources and order of prioritisation may differ, every step of the critical mineral supply chain is being targeted. These summaries take into account current government roadmaps and action plans on critical minerals in evidence within chosen countries: What objectives are motivating their response? What elements define their approach? What comparative strengths are they bringing to the table?

Secondly, this situation report positions India in the conversation on critical minerals among its global peers.

India is by many measures a new actor in this space. Yet its rising domestic demand, trajectory of trade and industrial policies, and its role and position in the 21st century global order augur a growing stake in critical raw minerals. It is in India’s interest to take regular stock of the scale and scope of emerging responses as it builds its own strategy towards securing critical minerals supply chains.

TABLE 2: EMERGING INTERNATIONAL COOPERATION AND PLATFORMS

Key emerging collective initiatives and platforms around critical mineral security and supply chains. US and European officials have also been discussing a “buyers’ club” to bring together consumers and eventually resource-rich countries to promote a competitive and diversified supply base.

II

Country
Policy Profiles

Australia hosts 3.4% of the world’s earth resources and is a major producer of critical raw materials. It currently produces about half of the world’s lithium (49% in 2020), is the second-largest producer of cobalt, and the fourth-largest producer of rare earths. It also has substantial resources of vanadium, manganese, and tungsten. It currently cites 26 minerals as critical, based on global technology needs, particularly around electrification, advanced manufacturing, and defence.

Its status as a major supplier anchors its current critical minerals strategy and related policies: it is seeking to become a global critical minerals powerhouse as a trusted and reliable supplier in meeting the growing and future demand for critical commodities. To realise this vision, Australia’s focus is on building sovereign capability in downstream processing through strengthening skilling, value addition, and intellectual property. Indeed, it has identified critical mineral processing and recycling as a modern manufacturing priority.

Facilitating investments into its mining industry and critical mineral projects is a government priority, as is creating an enabling environment driven by R&D advances, working on standards and accreditation, and creation of regional critical minerals hubs. It has set up a number of cooperative research centres towards this end as well, such as the Future Battery Industries CRC, which seeks to promote pathways for end-to-end battery production.

The motivation to contribute towards Australia’s economic prosperity and job creation, and enhance its competitiveness and global position as a supplier also undergirds its approach to international partnerships with “like-minded countries.” Just within last year, for example, it signed MoUs or announced critical mineral partnerships with Japan, India, and South Korea. Australia’s bilateral, plurilateral, and multilateral external outreach importantly includes attracting investments, developing government-to-government and industry-to-industry links, promoting its ESG standards, and seeking to become a centre for skills and capabilities in the Indo-Pacific. The annual critical mineral prospectus published by Austrade, for example, showcases investment-ready mining projects, and its 2021 Global Resources Strategy sought to identify new export markets for critical minerals. Private sector finance, investment, and participation is a key focus, as is building links between government, industry, and academia.

Lastly to note are the explicit linkages throughout Australia’s strategy documents between mining, manufacturing, and energy sector, which responds to Australia’s broader vision of meeting its net zero emissions goal by 2050. Under its Long-term Emissions Reduction Plan, the government has drawn a Technology Investment Roadmap, which will draw on Australia’s Critical Minerals Strategy to enhance manufacturing of low-emission technologies. It has identified five clean energy sectors, for example, where it can add value through mining of high-purity critical energy minerals and manufacturing clean technologies. A National Battery Strategy is also under way.[1] Geoscience Australia continues to build national knowledge and expertise on the country’s resource wealth, including critical minerals, under its Strategy 2028.

It is in developing its role as a preferred, ethical, and reliable supplier of critical minerals that Australia seeks to secure its place in a changing world.This vision has been backed by a number of government initiatives, announced in recent years, supporting downstream processing and manufacturing, R&D, and standards development. Financing schemes include the AUD 2 billion Critical Minerals Facility announced in 2021 and managed by Export Finance Australia and the AUD 200 million Critical Minerals Accelerator Initiative. Under the new government, the Critical Minerals Development Program is providing AUD 50 million over three years to support early and mid-stage critical minerals projects. A virtual R&D centre announced previously is being taken forward as the AUD 50.5 million Australian Critical Minerals Research and Development Hub to build the country’s intellectual property in processing, match expertise to projects, and strengthen international R&D collaboration and science diplomacy.

The new Albanese government is also updating the Critical Minerals Strategy, expected in mid-2023.

Canada is a global producer of many critical minerals, such as nickel, potash, and aluminium. It is the second-largest producer of niobium, an important metal for the aerospace industry, and the fourth-largest producer of indium, a key input in semiconductors and advanced manufacturing. It is also the only Western nation with abundant resources of cobalt, graphite, nickel, and lithium, essential ingredients for batteries and EVs. Canada has identified 31 minerals as “critical.”

Its strategy to deliver on what it calls a “generational opportunity” for its workers, economy, and net-zero future is informed by economic growth imperatives; environmental considerations; reconciliation with its Indigenous peoples as the government renews its partnership with them; diversity and inclusivity in the workforce; and global security. These objectives translate into six focus areas under which federal initiatives and investments are cited, and target specifically six of its 31 identified critical minerals that it deems to hold most significant potential: lithium, graphite, nickel, cobalt, copper, and REEs.

Ultimately, Canada’s approach can be characterised by three key features: increasing end-to-end supply chain competitiveness through targeted commitment to geoscience and innovation, project development, and a more skilled and inclusive workforce; inclusive, responsible, and sustainable development of its critical minerals industry; and securing market- and rules-based global supply chains. Each of these features corresponds to one or more focus areas outlined in Canada’s strategy document.

Building core geoscience knowledge and innovation is at the core of delivering on Canada’s ambition of hosting all stages of the critical minerals value chains for the six primary critical minerals targeted. To note here Canada’s Geoscience Strategy that aligns with Canada’s critical minerals strategy. Of the CAD 3.8 billion allocated in federal funding in the previous year’s budget, CAD 79.2 million has been dedicated to geoscience and exploration to better identify deposits.[1] A Clean Growth Program, targeting 43 clean technology R&D and demonstration project in three sectors including mining, ended after four years last year. A number of financing initiatives are in place to strengthen investment in research and exploration and de-risk innovation, such as a 30% tax credit towards exploring Canada’s vast landmass. Further initiatives target the acceleration of project development, in view of long lead times and embedded higher risks, include using the Strategic Innovation Fund, already active in the EV battery industry, to help build world-class critical mineral value chains. Lastly, a number of skilling and training initiatives have been identified to meet demands of the mining workforce and industry.

Building inclusive, responsible, and sustainable critical mineral supply chains rests on partnerships and a “nature-forward,” sustainable development approach. Canada stresses collaboration with its provinces, territories, Indigenous communities, industry, academia, as well as international partners to meet its objectives, and ensure benefits are equitably shared. Indeed, the consultation process for the preparation of its critical minerals strategy followed intense engagement with these and more stakeholders. Furthermore, Quebec and Alberta have published province-level strategies to capitalise on their mineral wealth, and a pan-Canada approach will need to integrate province-level approaches. Its “nature-forward” approach involves incorporating practices that prevent biodiversity loss, protect at-risk species, and support nature protection. Canada already has in place several national initiatives that support sustainable development, such as Towards Sustainable Mining and Extractive Sector Transparency Measures. Importantly, Canada’s strategy highlights developing sustainable infrastructure for its critical mineral supply chains, implicating investments in sustainable energy and transportation infrastructure. Furthermore, given the growing demand for responsibly sourced metals and minerals, Canada seeks to bring to bear its ESG credentials to strengthen international best practices and enhancing supply chain resilience.

Lastly, Canada’s pursuit of collaborative action is premised on national security. It emphasises engagement with allies and like-minded partners, whether on sustainability, business conduct, ESG, traceability, or promoting market standards. Take, for example, the Canada-US joint action plan or Canada and EU’s Strategic Partnership on Raw Materials inked in 2021. In fact, the strategy notes a need to align with, among strategic initiatives, Canada’s Indo-Pacific Strategy. Interestingly, it has identified critical minerals not only on the basis of their role in Canada’s economic security and transition towards a low-carbon economy, but also whether they are a sustainable source of highly strategic critical minerals for partners and allies.

To this end, it mentions seeking opportunities afforded by United States’ recently passed Inflation Reduction Act. What is more, it is seeking to amend its Investment Canada Act – in what is being recognised as the “most significant update” to the law in more than a decade – to clarity rules for foreign investment by state-owned enterprises. To note is the proposed provision to disclose information about an investor to allies, a measure that was not previously allowed.[2]

The EU is between 75% and 100% reliant on imports for most metals, as per the European Commission. It sources 98% of its REE demand from China, for instance, and 71% of its demand of PGMs from South Africa.[1] The EU has traditionally focused on refining and manufacturing (e.g., of clean energy components) instead of extraction; key pockets of domestic production include hafnium in France (49% of global production) and strontium in Spain (31% of global production).[2] The EU currently cites 30 critical raw materials based on economic importance and supply risk, a list that has grown from 14 materials first identified in 2011.

Currently, an EU Critical Raw Materials Act, launched in September 2022, is expected to be tabled by spring this year. It is expected to provide a shared understanding of strategic and thus highlight priority critical minerals, and to identify “Strategic Projects” all along the supply chain, from extraction to recycling to build a resilient supply chain.

A new European Sovereign Fund is on the cards to provide financial support in this domain. Targets of self-sufficiency, a more streamlined permitting regime, provisions for an institutional network that monitors, anticipates, and reacts, as well as the pursuit of broader set of international partnerships may also feature.[3]

EU’s approach to critical minerals is aligned with EU’s green and industrial agendas. Objectives, action plans, and initiatives around critical minerals in recent documents all respond to EU’s goal of making EU climate neutral by 2050 and ensuring EU’s industrial competitiveness in processing and advanced manufacturing. This “trifecta” is already in evidence through initiatives such as the REPowerEU plan, which seeks to reduce dependence on Russian fossil fuels and hasten EU’s clean transition. Boosting cleaner industrial processes and expanding clean energy technology manufacturing capacity form part and parcel of the plan, for which secure supply of CRMs is a necessary policy action.[4] A Green Deal Industrial Plan[5] has been announced, which seeks to enhance the competitiveness of Europe’s net-zero industry and aligns itself with the upcoming Critical Raw Minerals Act. The European Battery Alliance, launched in 2017, seeks to create a competitive battery cell manufacturing value chain within Europe; securing access to battery raw materials is again a priority area of work.

Sustainability and innovation form key policy directions, whether in terms of resource efficiency and circularity, or R&D into waste processing, advanced materials, and substitutions. Horizon Europe programme, the European Innovation Partnership on Raw Materials, and EIT RawMaterials are major platforms of note. On the industry front, the development of domestic capacities is in question. There are plans in motion to build lithium mines in Spain and Portugal, for instance. There is also recognition of changing industrial policies among partner countries, from US to Japan to South Korea, and the need to respond to these in a concerted manner to level the playing field for European companies.

Importantly, trade and investment policy is recognised as a fundamental tool in diversifying EU’s supply from international markets. Free trade agreements in particular are playing a key role in ensuring open access and avoiding market distortions, as the EU negotiates FTAs with a number of countries from a raw materials perspective (such as Australia). More broadly, the need to pursue expanded strategic partnerships has been noted, including with African and Latin American countries.

Japan is resource-poor and is import-dependent for its critical minerals needs. For example, it currently imports 58% of its REE demand from China: it is one of the leading export markets for its neighbour. Japan targets stockpiling of 34 rare metals at present. It has substantial rare-earth processing and downstream production capacities, such as in high-performance magnets that are key inputs for EVs and wind turbine technology.

Economic security guides Japan’s approach. Its strategy to secure its identified list of critical minerals, presented under an overall resource strategy published in 2020, recognises risks of over-reliance on China and intensifying resource competition among key motivations to secure stable supply. The 2010 incidence – when a maritime incidence over disputed islands in the East China Sea led to Beijing limiting REE exports to Japan, leaving Japanese industry in the lurch – provides recent context to Japan’s underlying motivations. Supply chain disruptions due to the Covid-19 pandemic have again highlighted the risks of over-dependence on its neighbour. Japan has stated its objective of reducing its dependence on China down to 50% by 2025.[1]

Rising uncertainty seems to be resulting in a stricter policy environment. Japan’s latest action is a new economic security act aimed at strengthening systems that affect the lives of its citizens, one of them being the system of “specified critical materials.” As clarified at the end of last year, these include not only strategic metals and minerals, but also components like permanent magnets and semiconductors.[2] In 2021, the Foreign Exchange Control Act was amended to bring foreign investments into Japanese rare-earth businesses under government scrutiny, and last year, REEs were brought under regulation, through an amendment to Japan’s Mining Act, requiring permits to mine.[3]

Stockpiling began in 1983, and pursuing “resource diplomacy” and developing an industrial base on the back of technological expertise have been additional principal pillars of Japan’s approach following the 2010 incidence. For example, Japan began to dedicatedly diversify supply, primarily through state-led overseas investments in the development of non-China mineral resource development projects, such as in Vietnam, Kazakhstan, and Australia. Efforts have paid off: it reduced its REE import dependency on China by over 30% within a decade to its current 58%, according to UN Comtrade data.[4]

These policy directions remain part of Japan’s response to secure critical minerals under its International Resource Strategy. To note are the following further takeaways. Firstly, emergency reserves are to be enhanced after a review of the current stockpiling standard of 60 days (in some cases 30 days) given an increasingly uncertain global environment. The targets will also not include industry stockpiles any longer. Secondly, the state remains a leading actor in Japan’s efforts to secure critical minerals. Japanese public finance and facilitation through key institutions – such as Japan Organization for Metals and Energy Security, JOGMEC; Ministry of Economy, Trade and Industry, METI; and Japan External Trade Organization, JETRO – towards diversification pursued by its companies continues to undergird Japan’s approach. METI’s recent reshoring policies include support for two domestic REE projects for recycling and magnets, for instance.[5] JOGMEC will also take the lead in strengthening Japan’s bilateral and multilateral cooperation. It is already pursuing opportunities with partners in third countries. Thirdly, fundamental to Japan’s external outreach and strengthening its domestic industrial base is the continued development of its technical expertise, innovation, and R&D across the supply chain that it is able to put on offer: from mine development and mine pollution control, to knowledge and tech transfer of its advanced satellite imagery analysis expertise (such as the Geological Remote Sensing Center established by JOGMEC in Botswana), to developing and collaborating on recovery and recycling technologies. This dovetails well with the objective of expanding the scope of Japanese companies’ participation abroad.

To this last point must be added Japan’s deep-sea mining efforts in its territorial waters, a policy priority mentioned in its Oceans Policy. Rare-earth deep-sea mud has been found in its Pacific waters – resource amounts found would meet 62, 47, 32, and 56 years’ worth of annual global demand for yttrium, europium, terbium, and dysprosium, REEs with important applications across clean energy, medical, electronics, and high-technology sectors.[6] Trial extraction is expected to begin in 2024.[7]

Japan will be preparing mineral-specific strategies in the coming time, as called for in its resource strategy.

UK’s current critical mineral needs are met almost entirely from overseas. It hosts growing processing and refining capacities, for instance smelting aluminium, refining platinum and palladium, recycling REEs and lithium-ion batteries,[1] and sees promise in lithium, tin, and tungsten extraction. In a first assessment by the British Geological Survey, 18 minerals with high criticality have been identified, as well as a watchlist of five minerals that are increasingly in criticality, based on economic vulnerability and global supply risk.

UK’s first-ever critical minerals strategy aligns itself with the objectives of meeting its energy transition (i.e., energy security), minimising supply chain risks and fulfilling the demands of its high-technology manufacturing sectors (i.e., economic security), and ensuring cutting-edge military technology and reduction of weaponisation risks (i.e., national security). It identifies China as the dominant player, and acknowledges the need to keep pace with other governments as they accelerate individual efforts.

Its three-pronged approach to securing critical minerals is guided by its “Global Britain” mindset: just as its coal and iron put it at the forefront of the Industrial Revolution, the UK is now seeking to become a leader player in the “global race for critical minerals.” It seeks to put to use its existing position of international leadership, whether in terms of international mining companies based in the UK, its prowess as a global financial centre, or its expertise in regulatory diplomacy towards this vision.

UK’s pitch to “accelerate domestic capabilities” along the entirely critical minerals value chain rests on building an enabling environment through ongoing national assessments, funding mechanisms, reducing key barriers to domestic exploration and extraction, and creating a domestic circular economy for critical minerals. This prong also includes promoting itself as a strategic location for refining and midstream materials manufacturing, re-establishing itself as a skills leader and a centre of critical mineral expertise, and positioning UK as a Scientific Superpower through its R&D and geological mapping efforts. This aligns with UK’s geological science strategy that seeks to deliver expert and innovative science towards global challenges, including decarbonisation and resource management. “Collaborating with international partners” involves diversifying sources (including potentially from the deep-sea mining) and encouraging participation of UK companies in the development of global supply. It also involves leveraging its wide-ranging membership and extensive engagement in international forums, from the IEA to the G7 to the Minerals Security Partnership, to promote market-led, transparent, and diversified, critical mineral supply chains among resource-rich countries, tackle global issues at large, and advance responsible development of critical minerals through ESG. “Enhancing international markets” will firstly draw upon UK’s own ongoing national experiment to improve ESG standards to lead the creation of a more transparent and sustainable critical minerals global industry that improves resilience of supply chains as well as levels the playing field for UK businesses. Secondly, the UK seeks to engage industry, standards organisations, and the financial sector to promote City of London as a global financial hub to support functioning critical mineral markets, de-risk investments, and develop new projects, and thereby position the UK as a centre of responsible international mining.

There are three other features of particular note. UK’s strategy importantly identifies state-sponsored activity distorting critical minerals markets and the opaque, volatile, and complex nature of critical mineral supply chains. Ensuring more effective and transparent global markets is part of UK’s response, for which it is keen on building and supporting traceability measures. Secondly, UK’s strategy underscores partnerships with like-minded and closest partners (it is currently cooperating bilaterally with countries such as Australia, Canada, and South Korea), but also calls for continued engagement with China to achieve its objectives.

Thirdly, the policy environment is being supported by an emerging institutional architecture and several financial schemes. For example, the Critical Minerals Intelligence Centre, set up in July 2022, will provide data, analysis, as well as insights on supply, demand and market dynamics. A Critical Minerals Unit will be established to act as the nodal point of governmental contact. The 850 million pound Automotive Transformation Fund supports development of an internationally-competitive zero-emission vehicle supply chain in the UK, and is funding a gigafactory as well as a feasibility study for rare earth permanent magnet production, among other projects.

The UK is currently in the process of a national-scale assessment of critical minerals within the country, and will also be undertaking a review of its skills, education and training along the critical minerals supply chain. These preliminary steps will shape its strategy, and inform targets and deliverables.

The US is heavily reliant on imports for the supply of most of the 50 minerals identified by the US Geological Survey as strategically important in its latest 2022 update. Out of the list of identified minerals, the US is the leading producer of helium and beryllium, and it is at the primary stage of production for several others. It also possesses substantial reserves of lithium, copper, nickel, cobalt and REEs.

The threat of dependence on supplies of critical minerals by strategic rivals, specifically China, underpins America’s policy directions. This reliance is seen as a matter of national security. No comprehensive strategy or white paper yet exists, but executive action to assess supply chains, identify vulnerability, and define objectives with respect to critical minerals – importantly through a sector by sector approach – has picked up pace in recent years under the Trump and now Biden administrations against the context of intensifying US-China systemic rivalry and America’s policy ambition and response to shift supply chains away from China.

A first key pillar of US’s push to break reliance on China is to develop its domestic exploration, mining, production, processing, and recycling capabilities towards a “Made in America” supply chain for critical minerals. The US once led global REE production, but began to lose momentum post 1980s due to expanding regulation and environmental concerns (which coincided with China’s turn towards investment into REEs as a strategic commodity). Several government investments have been announced, for example towards processing REEs and setting up demonstration facilities towards sustainable lithium production and REE recovery from waste.

Importantly, US’ domestic push aligns with industrial policies and climate-related legislation, key among them the Infrastructure Investment and Jobs Act and Inflation Reduction Act (IRA). The IRA, for instance, lays the foundation for a domestic EV market through changes in the awarding of a USD 7,500 tax credit: an increasing share of not only manufacturing and assembly of EV components is to be done in North America, but a gradually increasing percentage of critical minerals used in EV batteries must be extracted, processed, or recycled in countries with which the US has free trade agreements.

Three elements of note that undergird its domestic drive: a focus on incentivising and facilitating private sector participation; interagency efforts and individual approaches of particularly commerce, energy (DoE), and defence (DoD) departments;[1] and the pursuit of responsible and sustainable practices and standards. For example, the 2020 Onshoring Rare Earths Act, introduced in the Senate, calls for new tax deductions for the purchasing and acquisition of critical minerals extracted in the US.[2]

Regarding institutional stakeholders, the DoE envisions itself as an essential source of science, technology, and engineering solutions to re-establish US competitiveness in this space. It has published an overview report on strengthening an energy-sector industrial base, for which it identifies an opportunity in increasing domestic raw material availability.[3] The DoD, too, has published an action plan towards securing defence-critical supply chains that implicate critical minerals.[4] They have also announced funding initiatives, particularly related to R&D and innovation.[5]

America’s second strategic and policy direction is towards international networking. The US is partnering with like-minded countries for investment, production, and overseas activity to diversify sources. It is also pursuing plurilateral and multilateral coordination to develop collective approaches for supply chain resilience and security (see Table 2). For example, The US is exploring narrow trade pacts focused on critical minerals with allies like EU, Japan, and the UK in a bid to create a “critical minerals buyers’ club.”[6]

A third policy approach relates to security measures that implicate trade policy. For one, the US is reforming and strengthened stockpiling to reverse sell-offs to private customers over the past decades. For example, US energy, defense, and state departments have come together to begin a critical minerals stockpile for clean energy technologies.[7] Secondly, it is seeking to strengthen trade enforcement mechanisms to counter non-market and unfair foreign trade practices that adversely impact supply of critical minerals and materials. The 100-day reviews recommend supply chain resilience as a part of US trade policy approach towards China.

India is endowed with significant reserves of valuable minerals, with small mining operations spread across the country. As of 2019, India is a key producer of metals such as chromite, bauxite, aluminium, zinc, and lead. It possesses potential domestic recoverable reserves of other strategic minerals, such as cobalt, graphite, platinum group of metals, REEs, molybdenum, and tungsten, but faces technical and economic obstacles in their exploration. India is otherwise heavily dependent on import of most strategic minerals.

India currently does not have a critical minerals strategy in place. The latest Economic Survey 2022-2023[1] terms the availability of REEs and other critical minerals as a possible next “geopolitical battleground.” It prescribes a “carefully crafted multi-dimensional mineral policy” and the need to create strategic mineral reserves.

A first seminal document by the think tank Council on Energy, Environment and Water in association with the Department of Science and Technology, Government of India, provides a starting point for the conversation on the need to secure reliable sources of metals and minerals deemed important for India’s future-oriented economic growth.[2] The Ministry of Mines is otherwise leading policy-related effort on this front as it seeks to modernise India’s mining sector – its 2016 National Minerals Exploration Policy, for example, lays out a comprehensive framework for exploration in the country, touching on mapping and data, deep-seated/concealed deposits, offshore exploration, and private sector participation. The 2019 National Minerals Policy seeks to promote domestic industry, reduce import dependency, and feed into Make in India initiative. While both documents briefly reference REEs and/or critical minerals, neither define them or develop their context. The 2019 document, does, however, recognise minerals security as a key issue, and the need to ensure long-term mineral security through exploration and development as well as acquisition of foreign assets. Interestingly, the Ministry of Mines’ latest annual report (2021-22) more fully acknowledges India’s import dependence for strategic minerals as “one of the most obvious challenges,” and maps India’s international cooperation activities. The annual minerals yearbook, put together by the Indian Bureau of Mines under the Ministry of Mines also provides useful foreign trade statistics of individual ores and minerals.

The government is waking up the challenge of sourcing these necessary inputs to realise its ambitions of becoming a global manufacturing leader, push for renewable energy, and plans to encourage development and adoption of electric vehicles within India. Indeed, a recent discovery of a major lithium deposit, which now makes India the country with the fifth-largest reserves in the world, has focused attention on India’s domestic potential. A number of measures and initiatives are in evidence, again largely led by the Ministry of Mines. For example, a National Mineral Exploration Trust was established in 2015 to expedite minerals exploration, with special attention to strategic and critical minerals, and since 2017, the Geological Survey of India has intensified REE exploration in the country. It is looking to complete major national-level surveys by 2024 to expedite domestic exploration activities, and is also in the process of creating a National Geoscience Data Repository.

Importantly, a joint venture company, Khanji Bidesh India Ltd. (KABIL) was set up in 2019 to identify, explore, acquire, develop, mine, procure, and sell overseas mineral assets for 12 critical and strategic minerals, a list that includes lithium and cobalt. KABIL is expected to take charge on sourcing through trade opportunities, government-to-government collaborations, and strategic investments and acquisition. Select source countries have been shortlisted, and engagements are underway with Australia, Argentina, Bolivia, and Chile. Africa is expected to be another focus.[3]

Also of note are recently notified draft amendments to India’s Offshore Area Mineral (Development & Regulation) Act, 2002 by the mines ministry to allow private sector participation in auctions for mining blocks in India’s territorial waters and continental shelf.[4] Currently, there is a public sector monopoly in the space.

Taking from country briefs presented in the situation report, the following are some key issues for consideration towards defining and implementing a concerted Indian response to sourcing critical minerals and securing critical minerals supply and value chains:

· Aligning objectives: Securing critical minerals implicates India’s net-zero targets, economic growth, defence industry, as well as key Indian initiatives and schemes, such as Make in India and Atmanirbhar Bharat (Self-Reliant India Initiative). Any official approach or strategy will need to recognise and give the same due weightage. Importantly, India will need to assess what opportunities exist for its mining and manufacturing industries, and what challenges it faces in realising these.

· Focus areas and tools: Which parts of the critical minerals supply and value chains will India seek to secure through what measures? For instance, India boasts of some expertise in extracting and processing REEs from mineral ores, but currently lacks downstream manufacturing capability. R&D efforts, too, are still fledgling. More fundamentally, mapping efforts remain unfinished.

What financing and other public support mechanisms can facilitate the development of domestic supply and value chains? India’s Product Linked Incentives (PLI) schemes has been making waves: it currently covers 14 sectors that include electronics, solar PV modules, and advanced chemistry cell battery storage, which need critical mineral inputs.

· Stakeholders and institutions: Which inter-agency cooperation is key? How can the Indian government promote a whole-of-government approach? Is a nodal, autonomous body required for better coordination between relevant departments and ministries? Moreover, it will be important for India to involve the private sector, for which an assessment of existing legislation and regulation is also necessary. Indeed, the industry is urging the government to establish a “Rare Earth Mission” to encourage private sector participation.[5] India will also need to take into account various communities that may be affected by domestic critical mineral mining and development.

· International engagements: What should be the scope of India’s external engagement on critical minerals? Which countries should it target to develop long-term trade and investment relationships towards securing reliable sources? Which multilateral platforms are important for India to participate? To note is India’s inclusion in a number of supply chain security initiatives with close strategic partners, especially those related to technology and clean energy. India can leverage its participation in these to collaborate more concertedly on responsible, reliable, and transparency sourcing of critical minerals.