USA-led Minerals Security Partnership (MSP)

The Indian Government is increasingly concerned about India's absence from the Minerals Security Partnership. A US-led partnership aimed at securing supply chains of critical minerals and reducing dependence on China. 

Rising Demand for Critical Minerals

• Projected significant expansion in demand for critical minerals, which are essential for clean energy and other technologies in the coming decades.
• These minerals are used in the production of mobile phones, computers, batteries, electric vehicles, solar panels, wind turbines, aerospace, communications, and defense industries. 

Definition and Significance of Critical Minerals

• Critical minerals are elements used in essential modern-day technologies and are susceptible to supply chain disruptions.
• Graphite, Lithium, and Cobalt are major critical minerals used in EV batteries. Rare earth minerals are vital for semiconductors and high-end electronics manufacturing.
• These resources are key to the transition towards clean energy and digital economy worldwide. Supply shocks can severely impact economies and strategic autonomy of countries dependent on others for critical minerals. 

Minerals Security Partnership (MSP)

• Objective: To strengthen critical mineral supply chains.
• Partners: United States, Australia, Canada, Finland, France, Germany, Japan, Republic of Korea, Sweden, United Kingdom, European Commission.
• Focus: Cobalt, Nickel, Lithium, and 17 "rare earth" minerals.
• Significance: Catalyzes investment from governments and the private sector, adhering to high environmental, social, and governance standards. 

Concerns for India's Exclusion from MSP

• Supply of Critical Minerals: India's growth strategy relies on a shift to electric vehicles and increased electronics manufacturing, necessitating secure mineral supplies.
  • India lacks extractable quantities of certain rare earth elements like Dysprosium, Terbium, and Europium.
• Dependency on Other Countries: India would need support for the supply of critical minerals it lacks. Other countries in the partnership have reserves and technology for extraction and processing.
• Technology Status: India's limited expertise in critical mineral extraction and processing likely contributed to its exclusion from the partnership. Countries like Australia, Canada, and Japan possess the necessary reserves and technology. 

India's Efforts to Address Critical Minerals

• Lithium Agreement: India signed an agreement with an Argentinian firm in 2020 to jointly prospect lithium reserves in Argentina.
• India-Australia Critical Minerals Investment Partnership: India and Australia aim to strengthen their partnership in critical minerals projects and supply chains.
  • Australia's resources can assist India in meeting its emission reduction goals and fulfilling demands for critical minerals. 

Concerns for India

1. Dependency Issue

• Without exploring and producing critical minerals domestically, India may rely heavily on a few countries, including China, for its energy transition plans.
• This would create a similar dependency to that of oil.

2. Lack of Expertise

• India's exclusion from the MSP is attributed to its limited expertise compared to other partner countries.
• Australia, Canada, and Japan possess reserves and advanced technology for extraction and processing. 

Way Ahead

• India should promote competition and innovation in the rare earth sector, attracting significant capital investment and establishing competitive facilities.
• Consider creating a new Department for Rare Earths (DRE) under the Ministry of Petroleum & Natural Gas, utilizing exploration, exploitation, refining, and regulation capabilities.
• Encourage Indian private players to engage in junior exploration businesses in the Indian Ocean Region (IOR) to prospect for rare earth elements and supply value-added products domestically. 

Conclusion

India's exclusion from the Minerals Security Partnership (MSP) highlights the need for action. To secure a stable supply of critical minerals, India must open its rare earth sector to competition, establish a dedicated Department for Rare Earths (DRE), and encourage private exploration in the Indian Ocean Region. These steps will help India become self-reliant and meet the demands of its growing energy and technology sectors.