New kid on the bloc: India joins global critical mineral partnership

In one of the key developments during PM Modi's recent state visit to the US, India was included as the newest partner in the Mineral Security Partnership (MSP), a global initiative by the US to strengthen critical mineral supply chains. This much awaited announcement was well received by the Indian industry stakeholders, who now expect an accelerated growth of a diverse and sustainable critical energy mineral supply chain in India.

During their much-followed interaction, PM Modi and President Biden reiterated their commitment to combating climate change and achieving a sustainable future. They expressed a keen desire to elevate strategic technology collaborations to build resilient supply chains, and welcomed the deepening cooperation in critical minerals and space sectors.

In a press statement at the joint press briefing in the US on June 23, PM Modi said: "We have taken several important initiatives to implement the shared vision of India and America in Clean Energy Transition. This includes areas such as green hydrogen, wind energy, battery storage and carbon capture. We also decided that amidst global uncertainties, India and the US, as trusted partners, will create reliable, secure, and resilient global supply chains and value chains."

Welcoming this partnership, Vikram Handa, MD of Epsilon Carbon, and Co-Chair of the India Battery Supply Chain Council (IBSCC) expressed: "The collaboration between India and the United States to propel the common objectives of diversifying and securing critical mineral supply chains is of utmost importance to enhance and strengthen the EV ecosystem in the U.S. This needs to be done while adhering to high environmental, social, and governance standards to advance sustainable economic development opportunities. It is a moment of pride that India's patented technology is being utilized to catalyze the EV battery manufacturing industry in the U.S. and Epsilon is fueling this journey."

It is an important achievement, feels Dr Rahul Walawalkar, Founder and President - India Energy Storage Alliance (IESA), as the IESA team had been pursuing this issue for over 6 months, setting up appropriate dialogs with various stakeholder including Niti Aayog. Ministry of External Affairs, Ministry of Mines, Ministry of Commerce and Industry, and the Prime Minister's Office. "This is a key development for India. Being in the partnership could help attract investment into supply chain companies in India, and enable transparent information sharing on raw material availability."

Dr Walawalkar feels this agreement is a key milestone, which will help foster growth of the industry. "Being part of the MSP is critical because it allows the Indian supply chain companies to become part of the global ecosystem, and help them to scale up much faster and bigger than what they would have done for domestic giga factories."

Significance of MSP

Also known as the critical minerals alliance, the MSP was announced in June 2022 with an aim to ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of the countries to realize the full economic development benefit of their geological endowments. The 14 MSP members include: Australia, Canada, Finland, France, Germany, Italy (joined in 2023), Japan, South Korea, Sweden, Norway, UK, USA, the European Union and now India.

The creation of this partnership is a response to the increasing demand of critical minerals and their tight supply chain, and to reduce China's dominance in the global critical mineral market. The focus is primarily on collaboration in supply chain of critical minerals (such as Li, Ni, Co, REEs) for high-tech applications such as EV/energy storage batteries, semiconductors, and specialized electronics.

Critical minerals are rare, and extracting them requires high technical expertise, and these projects require million-dollar CAPEX investments spread over 5-10 years. Further, globally processing capacities for these critical minerals are heavily concentrated in China (shares as high as 80 – 90 percent for select minerals). While these are still early days, under the aegis of the MSP, member countries can co-operate for jointly evaluating and developing these projects and enable a diversified supply chain following high environmental and social governance standards (in mining).

How does India benefit?

• Expertise and experience of MSP member countries can accelerate exploration and development of critical minerals' (mining) projects in India.

• Access to high-end technology for extracting/processing/refining these critical minerals by setting up upstream/downstream facilities in India. In return, MSP members can benefit from India's low operating cost base and access to India's large, young, and qualified labor pool.
• Access to critical minerals mined from partner countries can ensure a stable supply for India's upcoming midstream segment (leveraging strengths in specialty chemicals space) to produce for local as well as global markets.
• Potential access to global capital for specific project opportunities, in collaboration with member countries.
• MSP entry can be and added advantage for promoting further co-operation between member countries closer to India's such as Australia, Japan and South Korea (with each of whom, India already has signed FTAs).