Emphasising that the shift to clean energy entails a significant growth in requirement for critical minerals (CM), the Economic Survey on Tuesday said the availability of CM and rare earth elements (REE) will be the next “geopolitical battleground”, after crude oil.

“As we are aware, REE and CM are essential for generating renewable energy (RE). The problem is that they are produced in a few countries and processed in even fewer countries. A globally synchronised energy transition to non-fossil fuels might be difficult to pull off if adequate REE and CM are not available. That would leave fossil fuel-based assets stranded for many countries’ economies,” it added.

Cobalt, copper, lithium, nickel and REEs are critical for producing electric vehicles (EVs) and batteries and harnessing solar power and wind energy. Solar photovoltaic (PV) plants, wind farms and EVs generally require more minerals than their fossil fuel-based counterparts.

For instance, a typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a gas-fired plant.

Demand for CMs and REEs

The Survey pointed out while the demand for CMs is set to increase because of the global preference and emphasis towards RE, the global CM supply chain is highly concentrated and unevenly distributed. The skewed distribution of resources poses a supply risk in the face of its enhanced demand.

Critical minerals (CMs) such as lithium, nickel, cobalt, manganese and graphite are crucial to battery performance, longevity and energy density, while REEs are essential for permanent magnets that are vital for wind turbines and EV motors.

Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies.

“A carefully crafted multi-dimensional mineral policy would reduce our dependence and address the problems for the future. The country has resources of nickel, cobalt, molybdenum, and heavy REEs, but further exploration would be needed to evaluate the quantities of their reserves,” the Survey said.

Need for strategic reserves

There is a need to create strategic mineral reserves along the lines of strategic petroleum reserves to ensure a continuous supply of minerals. Also, policies should consider investing in internal research including technological innovation for mineral exploration and processing and the development of Recycling, Reusing, and Repurposing (R3) technologies, it added.