As part of a global ‘China-plus-one’ strategy adopted after the Covid-19 pandemic that caused massive supply chain disruptions, a group of western countries is working together to develop alternatives to China to ensure key industrial supplies . A new US-led collaborative initiative of 11 countries aims to strengthen critical mineral supply chains. India is not part of this scheme – called the Minerals Security Partnership (MSP) – but New Delhi works through diplomatic channels to gain access.
What is the Minerals Security Partnership (MSP)?
The US and 10 partners – Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea (South Korea), Sweden, the UK and the European Commission – have come together to form the MSP. The new grouping aims to boost government and private sector investment to develop strategic opportunities.
“Demand for critical minerals, which are essential for clean energy and other technologies, is expected to increase significantly in the coming decades. The MSP will help catalyze government and private sector investment for strategic opportunities — across the entire value chain — that meet the highest environmental, social and governance standards,” the US State Department said in a June 14 statement. .
According to industry insiders, the new group could focus on the supply chains of minerals such as cobalt, nickel, lithium and also the 17 ‘rare earth’ minerals. The alliance is seen as primarily focused on developing an alternative to China, which has created a processing infrastructure for rare earth minerals and acquired mines in Africa for elements such as cobalt.
What are Rare Earth Elements?
The 17 rare earth elements (REE) include the 15 lanthanides (atomic numbers 57 – that is Lanthanum – up to 71 in the periodic table) plus Scandium (atomic number 21) and Yttrium (39). REEs are classified as light RE elements (LREE) and heavy RE elements (HREE).
Some REEs are available in India – such as Lanthanum, Cerium, Neodymium, Praseodymium and Samarium, etc. Others, such as Dysprosium, Terbium and Europium, which are classified as HREEs, are not available in Indian deposits in extractable amounts. Therefore, there is a reliance on countries like China for HREEs, which is one of the leading producers of REEs, accounting for an estimated 70 percent share of global production.
According to the US Geological Survey, supplies from China started to get erratic as early as 1990, as Beijing kept changing the quantities it would allow to produce and export. According to the USGS, the Chinese government also began restricting the number of companies, both Chinese and Sino-foreign joint ventures, that could export REEs from China.
Why are these minerals important?
Minerals such as cobalt, nickel and lithium are needed for batteries used in electric vehicles. REEs are an essential — though often small — part of more than 200 consumer products, including cell phones, computer hard drives, electric and hybrid vehicles, semiconductors, flat screen TVs and monitors, and high-performance electronics. India is seen as a late mover in efforts to enter the lithium value chain, at a time when EVs are expected to be an industry ripe for disruption.
The year 2022 is likely to be a turning point for battery technology – with several potential improvements to Li-ion technology, with alternatives to this proven formulation in the advanced stages of commercialization. India has an ambitious plan to convert much of its transportation to electric and would require these minerals. According to the plan, by 2030 80 percent of the country’s two- and three-wheeler fleet, 40 percent of buses and 30 to 70 percent of cars will be electric.
What is India’s biggest concern right now?
“If India cannot explore and produce these minerals, it will have to depend on a handful of countries, including China, to fuel its plans for the energy transition to electric vehicles. That will be comparable to our dependence on a few countries for oil,” said one economist.
Industry watchers say the reason India wouldn’t have found a place in the MSP group is because it doesn’t bring expertise to the table. In the group, countries like Australia and Canada have reserves and also the technology to extract them, and countries like Japan have the technology to process REEs.