Context

In the Union Budget for 2024-25, Union Finance Minister Nirmala Sitharaman unveiled the establishment of a Critical Mineral Mission. Subsequently, in August, the Ministry of Mines held a seminar to outline its goals. Officials highlighted that the initiative is being accelerated in 'mission mode' with three key objectives: increasing domestic production, prioritizing the recycling of critical minerals, and encouraging the acquisition of assets abroad.

Overview

• Efforts are progressing on several fronts. The recent amendment to the Mines and Minerals (Development and Regulation) Act of 1957, embodied in the Mines and Minerals (Development and Regulation) Amendment Bill, 2023, has removed six minerals from the atomic list, allowing private sector exploration in India.
• To secure a supply of critical minerals from abroad, a joint venture called Khanij Bidesh India Limited (KABIL) was established in 2019 by three public sector enterprises. In January 2024, KABIL signed its first major agreement for lithium exploration and mining, gaining access to five blocks in Argentina's Catamarca province, owned by Camyen.
• Indian mining companies, both major and medium-scale, are actively pursuing opportunities to maintain a steady supply of minerals. However, India’s exploration and processing capabilities for these minerals are still developing. The country also lacks manufacturing capacity for end-use components and needs to enhance its labour force skills, particularly for battery production.

Africa's Role in India's Supply Chain:

To succeed in its Critical Minerals Mission, India needs to leverage existing partnerships with African countries, which hold 30% of the world’s known critical mineral reserves.

·        Historical and Economic Connections:

• •  India has deep political, economic, and historical ties with Africa, supported by a three-million-strong Indian diasporas.
  •  External Affairs Minister S. Jaishankar has referred to Africa as the “land of the future,” reflecting its growing significance in global priorities.

·        Diplomatic Engagement: India has expanded its diplomatic presence in Africa, recognizing the region’s importance.

• Commercial Ties: In 2022-23, bilateral trade between India and Africa totaled $98 billion, with $43 billion coming from the mining and mineral sectors. India has invested $75 billion in Africa, with public sector units focusing on acquiring energy assets.

• Energy Imports: India imports approximately 34 million tonnes of oil from Africa, accounting for 15% of its total demand. There is a growing import of natural gas, minerals, and mineral fuels from Africa.

• Investment in Solar Projects: As part of the International Solar Alliance, India has earmarked $2 billion for solar projects in Africa.
• African Policy Developments: African governments are moving away from a ‘pit-to-port’ model with various policies: eg
  • Tanzania is developing a multi-metal processing facility.
  • Zimbabwe and Namibia have banned raw mineral exports to promote  value addition.
  • Ghana has introduced a new policy for green minerals.
• The upcoming African Green Mineral Strategy: aims to drive Africa’s minerals-based industrialization, presenting opportunities for India to support this developmental agenda.

China's Influence:

Increasing global focus on China's dominance in the value chain highlights economic and security risks for India. China has established significant control through early asset acquisitions, and the development of processing and manufacturing capabilities. eg

•  Cobalt Mining:

Chinese mining companies hold a substantial presence in cobalt mining in the Democratic Republic of Congo.

• Recent Agreements:

China recently signed a $7 billion ‘minerals-for-infrastructure’ deal, further strengthening its influence in the mining sector.

Opportunities for Collaboration:

• Building Alternative Partnerships:

In the current geopolitical climate, Africa is seeking viable alternative partnerships, presenting unique advantages for India.

• Indian Construction Experience:
  • Indian construction companies have undertaken projects in 43 African countries, including transmission lines in Tunisia, hospitals in Tanzania, and railway lines in Ghana.
  • Strategic projects and mining-adjacent infrastructure development are crucial in the African critical minerals sector.
• Cooperation Agreements:

India has signed memoranda of understanding with Zambia and Zimbabwe for collaboration in geological mapping, mineral deposit modelling, and capacity building.

• Workforce Development:

Leveraging mechanisms like the Indian Technical and Economic Cooperation, which has trained 40,000 Africans over the past decade, could enhance the critical mineral workforce and foster positive energy partnerships.

• Role of Indian Technology Start-ups:
  • Indian technology start-ups are increasingly involved in the mining value chain, offering innovations in exploration, extraction, beneficiation of mineral ores, and reconnaissance services.
  • Their expertise in niche areas provides valuable services that African governments might find beneficial.
• Focus on Value Addition:
  • Marit Kitaw, Director of the African Minerals Development Center, emphasized that adding value is crucial for transforming lives.
  • India’s Critical Mineral Mission should emphasize responsible practices in the context of a geopolitically charged energy transition.

Conclusion

India's engagement with Africa on critical minerals holds substantial promise for both regions, driven by Africa's rich mineral reserves and India's growing technological and industrial demands. This collaboration offers India crucial access to essential resources such as lithium, cobalt, and rare earth elements, which are vital for advancing its technology and renewable energy sectors. Building on a strong foundation of historical, economic, and diplomatic ties, India is well-positioned to contribute to and benefit from Africa’s mineral wealth through infrastructure development and technological innovation. However, the partnership also faces challenges, including geopolitical risks and the need for responsible and sustainable mining practices. Addressing these challenges requires a commitment to ethical practices, capacity building, and the strengthening of strategic partnerships. By focusing on these areas, India and Africa can create a resilient and secure supply chain for critical minerals, fostering economic growth and technological advancement in both regions while supporting sustainable development.

Source: THE HINDU