Critical Minerals: Dependence on imports from China poses a security challenge to India

Critical minerals play a vital role in national security, economic development, and energy independence. These minerals include lithium, cobalt, graphite, and Rare Earth Elements (RREs), which are crucial for producing several commodities, including solar panels and electric batteries. These minerals are also necessary for various military applications, defence equipment, and cutting-edge technologies. India has identified 30 such minerals that are important for its technological advancement and national security. This includes lithium, a vital component of lithium-ion batteries essential for drones. Likewise, the space programme depends on critical minerals and rare earth elements to create optical systems, specialised alloys, heat shields, and electronic systems for equipment like satellites, rovers, and spacecraft. Critical minerals are also integral to semiconductors.

However, China’s near monopoly in this sector poses a major challenge. In 2022, it produced 68 per cent of RREs, 70 per cent of graphite, and processed 90 per cent of RREs and 74 per cent of Cobalt. This near monopoly translates into India’s heavy dependence on Chinese supply chains, as almost 70 per cent of India’s lithium imports come from China. This dependence poses significant national security risks.

Despite the massive commercial benefits of exporting critical minerals to the world, China has had a history of weaponising these supplies for coercion. In 2010, Beijing banned exports of RREs to Japan for two months following the latter’s capture of a Chinese captain who had rammed his vessel into Japanese Coast Guard boats in the East China Sea. This ban compelled Japan to re-examine its dependence on Chinese mineral supply chains. Last year, China restricted gallium, germanium, and graphite exports in response to the United States’ attempts to curtail China’s access to American semiconductors.

India’s reliance on Chinese supplies, therefore, poses a significant challenge. This dependency carries the same risks as relying on arms imports. It makes a country vulnerable to supply chain disruptions, embargoes and geopolitical uncertainties. This can render the weapons inventory ineffective. Similarly, India may be denied the supply of these critical minerals when it needs them the most, adversely impacting its defence preparedness. The current state of India-China bilateral relations and the protracted border stand-off in Ladakh add another layer of complexity to this dynamic.

India has taken steps to mitigate this dependency in the last few years. Domestically, the government has launched the Critical Minerals Mission, reduced import duties on various critical minerals, implemented measures to step up exploration campaigns by auctioning off mining blocks, and expanded the Deep Ocean Mission. These efforts are being complemented by diplomatic initiatives, where India has aimed to secure mineral supply chains by strengthening relations with countries like Argentina, Australia, and Chile. The Critical Minerals Investment Partnership is one such example of creating robust supply chains. In addition, New Delhi is seeking to obtain mining assets in Latin America (Argentina and Chile) and Africa (Zambia and Congo), which have significant reserves of cobalt and lithium, among others. It has also signed up for the US-led Minerals Security Partnership, which strives to make global supply chains resilient to any disruption and promote investment in mining and processing of critical minerals.

With India implementing a robust military modernisation programme and focusing on technological self-reliance, the demand for critical minerals and RREs will only expand. It will be important, therefore, for New Delhi to take a proactive approach to reduce dependence on China.

(The writer is Director of the Centre for Security, Strategy and Technology at Observer Research Foundation)