Critical minerals

Indian Economy glossary

Topic: Environment and Sustainable Development · NCERT: Beyond NCERT

Meaning

Critical minerals are minerals that clean energy, electronics and defence depend on, and whose supply is at risk because only a few countries mine or refine most of them. Examples are lithium, cobalt and rare earths.

They matter because the energy transition (the long-term shift from coal, oil and gas to solar, wind, nuclear and green hydrogen) runs on them. If a country cannot get these minerals, it trades dependence on imported oil for dependence on imported minerals.

Explanation

What makes a mineral "critical"

A mineral is critical when two things are true at the same time:

  • It is essential. Clean energy, electronics or defence cannot work without it. For example, lithium and cobalt go into batteries, and rare earths go into magnets and electronics.
  • Its supply is at risk. A few countries mine or refine most of the world's supply.

  • A small number of suppliers → one policy change or conflict in one country → shortage and price spikes everywhere else.

  • A mineral that is important but easy to get from many places is not critical. A mineral that is scarce but has little economic use is also not critical.

Why supply risk is rising: resource nationalism

  • Resource nationalism: governments take tighter control of their natural resources. They use export bans, higher royalties (payments miners make to the government) or state ownership.
  • Examples:
  • China: export controls on gallium, germanium and rare earths.

  • Indonesia: a ban on exporting nickel ore, which forces companies to refine it inside Indonesia.

  • Effect on India:

  • export controls abroad → prices become volatile (they swing up and down sharply)
  • importers like India face supply risk
  • so India needs its own mining, recycling and foreign partnerships.

Link to the energy trilemma

  • The energy trilemma means a country must meet three goals at once: security (steady supply), affordability and sustainability (low emissions).
  • Critical minerals show the trade-off clearly:
  • more solar, wind and batteries → better sustainability

  • but more imported minerals and parts → weaker security.

  • Securing critical minerals helps India go green without becoming import-dependent.

What reduces the risk

  • Domestic exploration and mining, on land and offshore.
  • Recovery from mine waste (overburden and tailings).
  • Recycling of used batteries and electronics.
  • Buying mineral assets abroad and stockpiling (keeping a reserve for emergencies).
  • Partnerships with friendly countries to spread supply across many sources.

In India

  • The list: a committee set up by the Ministry of Mines in November 2022 identified 30 critical minerals. The list was released in 2023 and includes lithium, cobalt and rare earths [1].
  • The law: 24 of these 30 are placed in Part D of Schedule I of the MMDR Act, 1957 (the Mines and Minerals (Development and Regulation) Act, India's main law on mining) [1].
  • MMDR Amendment 2023: allows the Centre to auction blocks of critical minerals.
  • KABIL (Khanij Bidesh India Ltd): a joint venture of PSUs that buys mineral assets abroad, for example lithium in Argentina.
  • National Critical Mineral Mission (NCMM), approved by the Cabinet in 2025:
  • total outlay of ₹34,300 crore over seven years [1]
  • ₹16,300 crore from the government and ₹18,000 crore expected investment from PSUs and others [1]
  • covers more exploration on land and offshore, and faster regulatory approvals [1]
  • covers recovering minerals from overburden and tailings (mine waste) [1]

  • covers buying assets abroad, building a stockpile, setting up mineral processing parks, recycling and research [1]

  • Minerals Security Partnership (MSP): a US-led group of countries working to secure mineral supply chains. India joined in 2023.

Don't confuse with

  • Rare earths: a group of elements that forms one part of the critical minerals list. They are not the same thing. "Critical minerals" is the wider category of 30 minerals.
  • Resource nationalism: this is a policy by producer countries (export bans, higher royalties, state ownership). It is one cause of the supply risk that makes a mineral critical. It is not a type of mineral.
  • KABIL vs NCMM: KABIL is a PSU joint venture that buys assets abroad. NCMM is a government mission (₹34,300 crore [1]) covering exploration at home, recycling, stockpiles and processing parks, as well as assets abroad.
  • Minerals Security Partnership vs India's own schemes: MSP is a US-led international group that India joined in 2023. It is not an Indian mission or law.

Prelims Hooks

  • India has identified 30 critical minerals. The committee was set up by the Ministry of Mines in November 2022, and the list came out in 2023 [1].
  • 24 critical minerals are in Part D of Schedule I of the MMDR Act, 1957 [1]. Trap: the number is 24, not all 30.
  • NCMM (2025): ₹34,300 crore over 7 years, of which ₹16,300 crore is from the government and ₹18,000 crore from PSUs and others [1].
  • MMDR Amendment 2023 lets the Centre auction critical mineral blocks.
  • KABIL buys mineral assets overseas (for example, lithium in Argentina). MSP is US-led, and India joined in 2023.
  • Examples of resource nationalism: China's controls on gallium, germanium and rare earths, and Indonesia's nickel ore export ban.

Mains Points

  • Energy security in a new form: India is moving past its 2030 non-fossil capacity target. But solar, wind and batteries depend on minerals that a few countries control. So energy security now depends on minerals as well as oil. NCMM (₹34,300 crore [1]), KABIL and the MSP are India's three-way answer: mine at home, buy abroad and work with partners. Use this in GS-III answers on energy and infrastructure.
  • Industrial policy and Atmanirbhar Bharat: Indonesia's nickel ban shows how countries use their minerals to force processing at home. India's mineral processing parks, recovery from tailings and recycling under NCMM [1] aim to keep more value inside India. This links to manufacturing, jobs and lower import bills.
  • Sustainability of mining itself (GS-III/GS-II): more mining for critical minerals may fall on the same mineral-rich, tribal and low-income regions (such as Jharkhand, Chhattisgarh and Odisha) that are exposed to the coal transition. A fair approach needs just-transition safeguards, local benefit-sharing and recycling, so that clean energy does not repeat the social costs of coal mining.

Related concepts

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Sources

  1. 1Cabinet approves National Critical Mineral Mission, outlay Rs 34,300 crore over seven years (PIB)pib.gov.in · tier 1