In last month’s G20 summit at Johannesburg, Chinese Premier Li Qiang chose to connect with 19 mineral exporting countries and offered them finance and technical cooperation in mineral extraction, separation and processing. Critical minerals and rare earths extracted in African, southeast Asian and south American countries are shipped to China for processing. Already a major supplier, China is further strengthening its position in the supply chain of these metals and minerals.
The minerals are used in green energy technologies like EV batteries, solar cells, wind turbines, transmission cables and also in defense manufacturing such as drones, missiles, fighter aircrafts, satellites and are critical for the development and security of any nation. While China controls more than 50 per cent of rare earth minerals, it has very little control (less than 10 per cent) on upstream minerals. Upstream minerals like Lithium, Cobalt, Nickel, Vanadium, Graphite and copper are essential for green technologies like EVs, solar and wind. More so, upstream minerals are required in the initial stages of the supply chain.
Lithium, nickel and cobalt are used for EVs and energy storage. Copper is used for electrical wiring. Silicon, tellurium, niobium, beryllium, germanium, gallium, indium, tungsten and vanadium are used in solar panels, defense and advanced technologies. On the sidelines of G20, China launched an “initiative on green minerals” with all the partners who control upstream minerals. The Democratic Republic of Congo and Zambia have cobalt and copper; Zimbabwe and South Africa have lithium and manganese, and Indonesia has nickel. The demand for these are projected to surge by 2040 and China has cleverly forged alliances with these countries, so as to control the supply chain. Apart from critical minerals, rare earth elements like dysprosium and neodymium are used in magnet manufacturing, which are extremely critical for all advanced technologies from mobile phones to missiles, EVs and defense equipment.
There are 17 rare earth elements comprising 15 lanthanides plus scandium and yttrium. Lanthanides have a special place in the bottom of the periodic table where one electron each is filled from the lightest element lanthanum (La) to the heaviest element lutetium (Lu) in 4-f orbital. ‘Rare earth’ is the terminology in Inorganic Chemistry, and it by no means indicates that these minerals occur rarely. Though China, Vietnam, Brazil, Russia and India in this order hold the largest deposit of rare earth minerals, China holds 90 per cent of the refining capacity. Rare earth elements mined in different parts of the world are shipped to China for separation and processing. Neodymium/ dysprosium, iron and boron are combined in an alloy to form magnets that withstand high temperature and are used in all emerging technologies like drones, robots, missiles, fighter jets, automobiles etc.
The magnet is essential for increasing torque and speed, and enhances precision and efficiency. As China has a monopoly over rare earth magnets, it used its leverage against America in the recent trade war. It weaponized rare earth and banned the export of dysprosium, neodymium, yttrium, etc. As a result, Indian manufacturing of automobiles, EVs, mobiles etc. slowed down in the first quarter of this financial year and picked up only after China lifted the export ban for Indian firms. American President Donald Trump had to go for a compromise with Chinese president Xi Jinping at Gyeongju, South Korea during October on the sidelines of the APEC meet. The ban, thereafter, has been lifted universally for one year. The US, too, had to bend and allow exports of advanced H200 series of chips from Nvidia to China. This has brought them closer for mutually advantageous economic interdependence. President Trump has already made a deal for critical minerals and rare earth with Ukraine. In a bid to have control over minerals and fossil fuels, he even expressed a desire to annex Canada and Greenland. His move to change the regime in Venezuela is also to have control over oil and gas reserves. He has brought Pakistan closer, with an eye on rare earth deposits in Balochistan. Critical minerals thus have a role in geopolitics, and are driving the new world order.
Long before renewable energy and advanced technology became a global priority, China in the 1990s had bought lithium, cobalt and rare earth mines across Africa, Australia, and Latin America. It also developed technologies for processing and separation, and used state support aggressively. Subsidies, cheap capital and low-cost land enabled enterprises to sell at prices below cost. Several competitors in the US, EU and other parts of the world vanished. In the last week of November, India approved a Rs 7,280 crore scheme to promo te domestic manufacturing of rare earth magnets aiming to create 6000 metric tons of annual rare earth permanent magnet. The government will offer Rs 6,450 crore to selected bidders for five years and Rs 750 crore in capital subsidy for setting up the integrated facility. The facilities would cover the conversion of rare earth oxides to metals, metals to alloys and alloys to finished magnets. India has launched the National Critical Mineral Mission for its self-reliance.
Domestic exploration of lithium within the Union territory of J&K has started. The Geological Survey of India has been asked to take up exploration for 1200 projects. Partnerships with US, Argentina, Australia and Japan have been forged for lithium, cobalt and nickel for joint ventures, diversifying imports and reducing dependency on China. Khanij Bidesh India Ltd facilitates the acquisition of lithium from Bolivia and Chile. In the 1990s, China could foresee the surge in demand for critical minerals and rare earth and bought several mines in other continents and in 2025 it has launched ‘initiative on green minerals’ with 19 nations having deposits of critical minerals across continents. India, too should act decisively and connect with these countries. Since advanced technologies in fields like defense, space, nuclear cooperation, and domestic infrastructures are the key for Viksit Bharat by 2047, we must build our partnerships for diverse supply chains.
(The writer is former Head of Forest Force, Karnataka.)