Why in News?
· Critical minerals have become central to global industrial policy due to the accelerating clean energy transition, digitalisation, advanced manufacturing and geopolitical competition.
· China's dominance in the mining and processing of critical minerals, export restrictions on rare earth elements, and India's National Critical Mineral Mission (NCMM) have elevated mineral security as a key pillar of economic resilience, strategic autonomy and national security.
What are Critical Minerals?
· Critical minerals are minerals that are:
- Economically essential for strategic industries.
- Difficult to substitute because of their unique physical and chemical properties.
- Vulnerable to supply disruptions due to geographical concentration of production or processing.
· In 2023, India identified 30 Critical Minerals, including lithium, cobalt, nickel, copper, graphite, rare earth elements (REEs), titanium, tungsten, vanadium and molybdenum.
Strategic Importance of Critical Minerals
Energy Transition: Critical minerals are indispensable for achieving India's Net Zero target by 2070.
Applications:
- Lithium: Lithium-ion batteries.
- Nickel: High-energy-density batteries.
- Cobalt: Battery stability and longevity.
- Copper: Electricity transmission, EV charging infrastructure and renewable energy systems.
- Graphite: Battery anodes.
- Rare earth elements: Permanent magnets in wind turbines and electric vehicle motors.
- Example: An electric vehicle requires nearly six times more mineral inputs than an internal combustion engine vehicle.
- According to the International Energy Agency (IEA), demand for minerals required for clean energy technologies is expected to almost double by 2040 under announced policy scenarios, while demand under global net-zero pathways will be substantially higher.
Industrial and Technological Development: Critical minerals underpin electric vehicles, renewable energy, green hydrogen, artificial Intelligence, robotics, electronics manufacturing, aerospace and advanced manufacturing.
- Copper has become indispensable for power grids, electric mobility and renewable energy expansion.
Semiconductor and Digital Economy: Critical minerals such as gallium, germanium, silicon and rare earth elements are essential for semiconductor fabrication, Artificial Intelligence hardware, data centres, quantum computing, telecommunications and 5G infrastructure.
- These support India's Semiconductor Mission, Digital India and Production Linked Incentive (PLI) schemes.
National Security
- Modern defence platforms require critical minerals for fighter aircraft, missile guidance systems, drones, radars, satellites, precision-guided weapons and naval propulsion systems.
- For instance, neodymium and dysprosium are indispensable for permanent magnets used in advanced defence technologies.
Global Critical Mineral Landscape
The global supply chain is highly concentrated, particularly in refining and processing.
According to the IEA Global Critical Minerals Outlook 2026, the average market share of the top three refining countries increased from around 82% in 2020 to 86% in 2024.
China is the leading refiner of 19 out of 20 strategic minerals, with an average refining share of nearly 70%.
China accounts for more than 90% of global rare earth processing and more than 90% of graphite processing + Around 75% of cobalt refining and around 70% of lithium chemical processing.
Consequently, critical minerals have become strategic geopolitical assets comparable to oil in the twentieth century.
Emerging Global Challenges
Rising Demand: Rapid expansion of electric mobility, renewable energy, battery storage, semiconductors and Artificial Intelligence is driving unprecedented mineral demand.
- According to the IEA: global battery demand exceeded 1.5 TWh in 2025, lithium demand is expected to increase more than threefold by 2040 and copper demand will continue to rise due to electrification.
Supply Deficits: Current global mining capacity is insufficient to meet future demand.
- Example” Copper could face nearly a 30% supply shortfall by 2035 and demand for rare earth elements will increase significantly because of wind energy, defence technologies and electronics.
Geopolitical Risks: Critical minerals are increasingly used as instruments of strategic leverage.
- Examples: China imposed export controls on rare earth elements in 2025 & Democratic Republic of Congo imposed restrictions on cobalt exports.
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These developments highlight the growing trend of resource nationalism and supply chain weaponisation.
Global Policy Responses
European Union: The Critical Raw Materials Act seeks to ensure resilient supply chains through targets by 2030 => 10% domestic extraction, 40% domestic processing, 25% recycling and no more than 65% dependence on a single third country.
United States: Key initiatives include mineral Security Partnership, inflation Reduction Act incentives, strategic mineral reserves and bilateral mineral partnerships with Australia, Canada and Latin American countries.
Australia: Australia is expanding lithium mining, downstream refining and strategic partnerships with India, Japan and the United States.
QUAD: India, Australia, Japan and the United States are strengthening cooperation to build secure and diversified critical mineral supply chains.
India's Position
India's transition towards renewable energy, electric mobility, semiconductor manufacturing, defence indigenisation and green hydrogen will substantially increase mineral demand.
Under India's Net Zero pathway, cumulative demand for critical energy transition minerals could reach nearly 169 million tonnes by 2070, about 51% higher than under the current policy pathway.
India possesses sizeable reserves of:
- Graphite: 211.6 million tonnes.
- Nickel: 189 million tonnes.
- Copper: 163.9 million tonnes.
- Cobalt: 44.9 million tonnes.
- Monazite deposits along the coasts of Odisha, Andhra Pradesh, Tamil Nadu and Kerala also contain significant rare earth elements.
However, despite this geological potential, India remains highly dependent on imports for lithium, cobalt and nickel because of limited domestic exploration, inadequate refining capacity and dependence on imported high-purity mineral products.
Major Challenges
Limited geological exploration and inadequate geoscientific data.
Insufficient refining and high-purity processing capacity.
Delays in environmental, forest and land acquisition clearances.
High capital intensity and long project gestation periods.
Limited private sector participation due to exploration risks.
Low recycling efficiency caused by inadequate collection systems and technology.
Environmental concerns including land degradation, water pollution, mine waste and biodiversity loss.
Geopolitical risks arising from export controls, resource nationalism and concentrated global supply chains.
Although recycling can eventually meet nearly 25% of India's copper and graphite demand by mid-century, it cannot replace primary mining in the short term.
Government Initiatives
National Critical Mineral Mission (NCMM): The Mission seeks to develop the complete value chain from exploration to recycling.
- Financial Outlay: ₹16,300 crore government support + ₹18,000 crore investment by Public Sector Undertakings.
- Targets (2030-31): 1,200 exploration projects + Domestic production of at least 15 critical minerals + Overseas acquisition of 50 strategic mineral assets + Development of integrated processing and recycling infrastructure.
Khanij Bidesh India Limited (KABIL): KABIL has secured approximately 15,703 hectares for lithium exploration in Catamarca Province, Argentina, strengthening India's overseas mineral security.
Other Initiatives
- Auction of critical mineral blocks under the amended MMDR Act.
- Rare Earth Corridors proposed in Odisha, Andhra Pradesh, Kerala and Tamil Nadu.
- India-US Critical Minerals and Rare Earths Framework (2026).
- Strategic partnerships with Australia, Argentina, Brazil, Canada, Chile, France and Japan.
Reports and Global Assessments
International Energy Agency (IEA): critical minerals have become central to energy, economic and national security, investment in critical minerals declined by 9% in 2025, investment in battery metals declined by over 20% and copper prices reached record highs during 2026.
World Bank - Minerals for Climate Action: Production of graphite, lithium and cobalt may need to increase by nearly 500% by 2050 to achieve global climate goals.
OECD: Recommends stable regulatory frameworks, sustainable mining, skilled workforce development, circular economy and community participation.
NITI Aayog: Suggests diversifying import sources, building strategic stockpiles, strengthening domestic exploration, promoting recycling and enhancing private sector participation.
Way Forward
Develop integrated mine-to-manufacturing value chains.
Expand domestic refining and high-purity processing capacity.
Strengthen geological exploration using artificial intelligence, satellite mapping and remote sensing.
Create strategic reserves of lithium, cobalt, nickel and rare earth elements.
Promote urban mining, battery recycling and circular economy principles.
Simplify regulatory approvals while ensuring environmental safeguards.
Encourage public-private partnerships and long-term financing mechanisms.
Diversify imports through trusted partnerships in Australia, Latin America and Africa.
Invest in research on advanced battery chemistry, rare earth substitutes and efficient recycling technologies.
Establish a coordinated institutional framework integrating the Ministry of Mines, Ministry of External Affairs, industry, research institutions and state governments.
