India's Quest For Mining Critical Minerals: All You Need To Know

India is a step closer to mining critical and strategic minerals after the Cabinet approved royalty rates for mining lithium, niobium and rare earth elements.

The decision on royalty rates will now enable the central government to auction blocks of critical minerals for the first time, helping India in its quest for achieving net-zero emissions, according to a press release issued on Oct. 11 by the government.

India has taken multiple steps this year to encourage indigenous mining of critical minerals.

During the previous parliamentary session on Aug. 17, the Mines and Minerals (Development and Regulation) Amendment Act, 2023, was passed, which allowed for the delisting of six minerals from the list of atomic minerals. This would allow concessions for these minerals to the private sector through auctions.

Now, in October, the royalty rates for three minerals have been approved.

The rates are as follows:

• Lithium at 3% of the London Metal Exchange price.

• Niobium at 3% of the average sale price (both for primary and secondary sources).

• Rare earth elements at 1% of the average sale price of rare earth oxide.

Critical minerals are becoming increasingly important due to their application in many sectors, including high-tech electronics, telecommunications, transport, and defence. They are also vital for a global transition to a low carbon emissions economy. India has set a target of achieving net-zero emissions by 2070.

To enable policy formulation that secures supply chains of these minerals for India, the Ministry of Mines has identified a list of 30 critical minerals for the country. These include lithium, niobium, titanium, copper and rare earth elements, among others.

From solar panels to semiconductors and wind turbines to advanced batteries for EVs, these critical minerals have a wide array of applications in critical, sustainable and futuristic sectors.

"Simply put, there is no energy transition without critical minerals, which is why their supply chain resilience has become an increasing priority for major economies," said the Ministry of Mines in its report.

By securing supply chains and encouraging indigenous mining, the government expects to reduce imports of these minerals, as "critical minerals have become essential for economic development and national security in the country," a government release said.

India is 100% import dependent for a majority of the identified strategic minerals. And, China is among the top five import sources for India for several of these minerals.

China's tit-for-tat trade war on technology with Europe and the U.S. led the country to impose restrictions on exporting gallium and germanium, which are crucial for semiconductors and electric vehicles. India's growing reliance on China, therefore, increases supply chain uncertainty, especially with both countries facing border conflicts and weaponising trade against each other.

Given the importance of critical minerals and the need to incentivise domestic private players to participate, the royalty rates were set much lower than stipulated.

The royalty rates, if not specified, would have been set at a default rate of 12%, according to the Second Schedule of the Mines and Minerals (Development and Regulation) Act.

In February this year, approximately 5.9 million tonne of lithium resources were found in the Salal Haimana area of Reasi district in Jammu and Kashmir, according to the Geological Survey of India. The country will have the seventh-largest lithium resource in the world, based on U.S. Geological Survey (2023) data.

Apart from lithium, India has an estimated 13 million tonne of monazite from beach sand along the peninsula, which contains 55-60% rare earth oxides, according to the Atomic Minerals Directorate.

Rare earth oxide reserves of 0.73 million tonne in the Chhota Udepur district in Gujarat and another 37,000 tonne of reserves in the Barmer district of Rajasthan have been established by the AMD.

An endowment of mineral resources, however, must be complemented with economic feasibility to be able to derive adequate value. This is lacking in India, with only a small portion of mineral resources being classified as "mineable reserves" by the Indian Bureau of Mines. India's recent push is a step towards improving economic viability for mining critical minerals.

Gujarat Mineral Development Corp., Coal India Ltd., Hindustan Copper Ltd. and National Mineral Development Corp. could potentially participate in India's critical minerals story.

Gujarat Mineral Development Corp.

In its FY22 annual report, GMDC had announced its foray into REEs as part of its plan to "future-proofing and de-risking" its operations. The company has scouted for these elements in the Chhota Udepur district in Gujarat, and is working on developing these metal assets, it said. GMDC's Ambaji mine has 7.3 million tonne of mineable resources, which includes strategic metals like silver, cadmium, germanium and selenium

National Mineral Development Corp.

NMDC, too, has announced its plans to diversify beyond iron ore into strategic and critical minerals, such as lithium and nickel, both in India as well as abroad.

The Australia-based Legacy Iron Ore Ltd., which is backed by NMDC, signed a lithium exploration joint venture with Hancock Prospecting Pty. in June 2023. In the latest concall, however, the management of NMDC did not signal interest in bidding for India's lithium reserves, given the lack of adequate return.

Hindustan Copper

The expert committee on critical minerals, based on a NITI Aayog comment, responded that it will work with Hindustan Copper for utilising critical minerals that occur with copper or while processing copper.

Hindustan Copper is also part of a joint venture named Khanij Bidesh India Ltd., along with National Aluminium Co. and Mineral Exploration and Consultancy Ltd. (earlier known as Mineral Exploration Corp). It was incorporated in 2019 to identify and acquire overseas critical mineral assets. Khanij Bidesh India has engagements with countries like Argentina and Australia to acquire strategic mineral assets.

Other Miners

Coal India Ltd. has amended its memorandum of association in FY23 to include non-ferrous and critical minerals, while also exploring acquisition of lithium, cobalt, and nickel assets abroad.

Mining and metal conglomerates like the JSW Group, Tata Group, Adani Group and Vedanta Group may also consider entering the critical minerals space, given their experience in the mining space.

The market needs to look out for fixed announcements made by the government regarding auctions and further processes, as well as companies regarding their interest in participating in this space.

Mineral auctions are likely to take place over the next few weeks, Mines Additional Secretary Sanjay Lohiya said on Oct. 5.

After the auctions, there is still a long way to go, from getting environment clearances to setting up the necessary infrastructure to mine and process the minerals, finally followed by commissioning.