Critical Mineral Imports and India's Green Energy Transition

India, world's third-largest consumer of energy, is moving towards a greener, sustainable energy landscape. Global climate obligations, lower dependency on fossil fuels, and the need to enhance energy security are the primary reasons for this shift. Green energy transition depends on critical minerals—key raw materials essential for the development of renewable energy technologies. Solar panels, wind turbines, electric vehicles (EVs) and energy storage systems use critical minerals. Over the past few decades, China has been the dominant country, exporting 60-70% of critical minerals to the world. This has made the world heavily dependent on China for critical minerals. To reduce dependency and aid the global supply chain, India has begun exploring these critical minerals to meet domestic and global demand as the world transitions to green energy.

The importance of critical minerals

Modern technology is built mostly by using critical minerals. Critical minerals are needed to build solar panels, advanced batteries for storage and transportation, semiconductors, and wind turbines. There cannot be energy transition without critical minerals. However, there are challenges that these critical elements face which include, supply disruptions due to shortage, inadequate production, and geopolitical factors. Lithium-ion batteries, permanent magnets, photovoltaic cells and electronic components that power green technologies are manufactured with the help of critical minerals.

The use of critical minerals in various energy transition initiatives are described below:

• Solar Energy: Critical minerals such as silicon, tellurium, indium, and gallium are needed to produce photovoltaic cells used in solar panels. India’s current solar capacity is 64 GW which is heavily dependent on these materials.
• Wind Energy: Rare earth minerals like dysprosium and neodymium are important for permanent magnets used in wind turbines. India is dependent on the availability of critical minerals as it aims to expand its wind energy capacity from the current 42 GW to 140 GW by 2030.
• Electric Vehicles (EVs): Lithium, nickel, and cobalt are used in lithium-ion batteries that power EVs. National Electric Mobility Mission Plan (NEMMP) aims to deploy 6-7 million EVs by 2024, implying more of these minerals will be required.
• Energy Storage: Nickel, cobalt and lithium are used in advanced energy storage solutions as they are dependent on lithium-ion batteries.

India’s mineral landscape

In the recent past, India has been one of the major importers of critical minerals. Rising energy demands in the country and the aim to transition to green energy, are the main reasons for this heavy import. India met the record of maximum power demand of 250 GW in May 2024, and is expected to reach 366 GW in 2030. Renewable solar and wind energy played a major role in meeting this demand. India is transitioning from traditional energy generation to renewable sources. Below are India’s import and export figures regarding minerals:

Source: Indian Bureau of Mines, Note: Figures are for all minerals excluding fuel/coal, gold/diamond and other minor minerals

As per the chart above, India’s imports were on a downtrend between 2018-19 and 2020-21 as imports fell from US$ 4.44 billion in 2018-19 to US$ 3.03 billion in 2020-21. On the contrary, exports during the same period were on a rise. Exports of minerals grew from US$ 1.46 billion in 2018-19 to US$ 5.00 billion in 2020-21.

Post 2020-21, the trend reversed with imports increasing and exports declining. Export of critical minerals in 2020-21 was US$ 5.00 billion and decreased to US$ 3.99 billion in 2023-24. The COVID-19 pandemic and environment worry due to the exploration of critical minerals, were the reasons for this decline. However, the import of critical minerals during the same period have more than doubled. Imports reached US$ 8.01 billion in 2023-24 from US$ 3.03 billion in 2020-21. The increasing use of renewable sources of energy is the primary reason for the rise in imports of minerals. Another driver is the heavy import of lithium as it is used in the batteries of EV vehicles.

Strategic measures taken by India

India's strategic approach to securing critical mineral supplies is multifaceted, involving international partnerships, domestic exploration, recycling, and technological innovation.

• Diversification of supply sources
  • ​​​​​​​​​​​​​​Supply chain stability is at a significant risk as India is dependent on imports of critical minerals. To mitigate these risks, the country is pursuing the diversification of supply sources. A key component of this strategy involves partnerships and agreements with resource-rich nations. For example, in 2022, India signed a Memorandum of Understanding (MoU) with Australia to jointly explore and develop lithium and cobalt resources. Australia, known for its vast reserves of these minerals, provides a reliable and stable source. Similarly, India initiated discussions with Canada, another country with substantial mineral wealth, to explore long-term supply agreements.
  • These partnerships help secure a steady supply of critical minerals and foster bilateral trade relations, enhancing economic cooperation. Diversifying supply sources reduces dependency on any single country, thereby enhancing India's resilience against geopolitical disruptions, trade restrictions or supply chain bottlenecks that could hamper access to these crucial materials.
• Strategic partnerships and investments
  • ​​​​​​​To gain control over its critical mineral supply, India is taking a proactive stance by investing in overseas mining projects. This approach allows India to gain direct access to mineral resources and reduces reliance on market volatility and external suppliers. The establishment of the Khanij Bidesh India Limited (KABIL) consortium exemplifies this strategy. Comprising National Aluminium Company Limited (NALCO), Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Limited (MECL), KABIL's mandate is to identify and acquire strategic mineral assets abroad.  
  • KABIL’s efforts focus on securing rights to mine and export minerals such as lithium, cobalt, and rare earth elements, essential for advanced manufacturing sectors like electronics, electric vehicles, and renewable energy. By investing in overseas mining projects, India ensures a controlled and stable supply chain, supports the domestic manufacturing ecosystem and reduces the risks associated with fluctuating global markets and supply disruptions.
• Domestic exploration and production
  • ​​​​​​​While India's reserves of critical minerals are limited, there is potential for undiscovered resources. Recognising this, the Indian government ramped up efforts in domestic exploration and production. The Geological Survey of India (GSI) made initial findings of lithium deposits in Karnataka and Rajasthan, sparking new exploration initiatives. These efforts are crucial, as localising mineral production can significantly decrease import dependence and create new economic opportunities.
  • Encouraging private sector participation and foreign investment in domestic mining can further bolster exploration activities. By creating a favourable policy environment, including simplified regulatory procedures, tax incentives, and robust legal frameworks, India can attract investments and expertise from domestic and international mining companies. This can accelerate the discovery and development of critical mineral reserves within the country, contributing to self-sufficiency in the long term.
• Recycling and urban mining
  • Recycling is an increasingly vital strategy for securing critical mineral supplies, especially in a world where resource extraction faces environmental and social challenges. India is focusing on recycling critical minerals from electronic waste and end-of-life products through urban mining initiatives. Urban mining involves recovering valuable materials like cobalt, nickel and rare earth elements from discarded electronics, batteries and other consumer products. This reduces the reliance on newly mined resources and addresses the growing problem of electronic waste.
  • India's E-waste Management Rules, 2016, emphasise the importance of recycling and responsible disposal of electronic waste. By enhancing recycling infrastructure, promoting research into efficient recycling technologies and incentivising the collection and processing of e-waste, India can develop a robust circular economy for critical minerals. This approach secures supply and contributes to sustainability goals by minimising environmental impact and conserving natural resources.
• Research and development
  • ​​​​​​​Investment in research and development (R&D) is pivotal for reducing the dependency on critical minerals and fostering innovation in alternative materials. Developing technologies that use less of these minerals or finding substitutes can significantly impact India's strategic mineral needs. For instance, research into sodium-ion batteries, which use abundant sodium instead of lithium, offers a promising alternative to energy storage solutions. These batteries could provide similar performance to lithium-ion batteries but at a lower cost and with a more secure supply chain.
  • Collaborations between academic circles, industry and government research institutions can accelerate the development of such technology. By fostering a robust R&D ecosystem, India can position itself at the forefront of technological innovation in critical minerals. Public-private partnerships and government-funded research initiatives can drive progress in acquiring substitutes for scarce materials, enhancing recycling processes and improving the efficiency of mineral extraction and processing techniques.

Challenges

Due to geopolitical issues, trade limits, and natural disasters, the global supply chain for critical minerals is risk and therefore disruption of supply chain is very prominent. As India depends majorly on China for importing these critical minerals, the trade issues between the U.S. and China in 2019 highlighted the risks of China’s dominance in this space. This presents the opportunity for India to be the upcoming destination for critical mineral hub with the help of domestic exploration. Both, the domestic demand for renewable energy generation as well as supply of these minerals to the western manufacturing industry, can be supported. Child labour and unsafe working conditions are some of the common issues that are faced while exploration of Cobalt, this causes ethical and environmental concerns. Mining activities have a major impact on the environment which is a significant challenge. India can navigate these concerns by putting in place policy frameworks which are focused on mitigating this challenge. The prices of critical minerals are dependent on supply issues, market demand, and trade. For example, the price of lithium rose from reached over US$ 15,000 per ton in 2024 from US$ 7,000 per ton in 2015. Such price volatility can affect the cost-effectiveness of green energy projects in India. With the help of domestic exploration, India can become self-reliant and be the price setter globally. India's emerging technological capabilities in the area of developing efficient extraction, processing, and recycling technologies for critical minerals, limits its ability to procure imported minerals domestically. This presents an opportunity for India to setup learning and skill development programs for the youth which in turn would lead to innovative solutions in this industry.

Road ahead

India's shift to green energy depends heavily on having access to critical minerals. As the country works to lower its carbon emissions and improve energy security, it’s crucial to ensure a reliable supply of these essential minerals. The current global political landscape offers India a chance to benefit from more diverse supply chains. India's future economic success will depend on how effectively it uses its energy and mineral resources and adapts to the global move toward zero emissions. By taking a broad approach—diversifying sources, forming strategic partnerships, boosting domestic exploration, recycling, and investing in research and development—India can pave the way for a sustainable and resilient green energy future.