After making a string of well-thought policy moves to increase the mining and processing of critical minerals over the last few years, the government recently found it needs to do more. It took off the auction table 11 of the 21 critical minerals blocks it had put up in the fourth round of bidding. The lukewarm response was not for want of trying. Over the last few years, the government has made space to attract private interest in minerals deemed critical for national security. There was genuine excitement in early 2023 over the discovery of substantial lithium deposits in Jammu’s Reasi district. In mid-2023, the government set the ground by selecting 30 minerals of strategic importance. A few months later, parliament allowed private companies to mine some of these minerals for the first time. Then came the auctions in 2024.
The concern over these minerals is existential. China’s overwhelming dominance in the domain worries India—especially on bismuth, lithium, silicon and titanium, for which more than half of India’s demand is met by our neighbour, which recently showed it’s willing to turn the supply tap for geopolitical reasons. The International Energy Agency estimated that demand for these minerals would double by 2030 and quadruple by 2040 to meet the Paris climate agreement’s goals. Last year’s fall in the price of lithium, cobalt, nickel and graphite was caused by new investment in supplies. The demand-supply equilibrium will soon be wobbling in search of new price points.
Information is crucial in a mining auction. Companies are unlikely to bid if they don’t know how much of what lies where. Though the Geological Survey has undertaken many more exploration projects this financial year and the National Mineral Exploration Trust has funded dozens of private projects, none has crossed the first three stages of UN’s resource classification framework—reconnaissance, prospecting and general exploration—to get to the final stage of ‘detailed exploration’. Given the tepid response to its efforts, the government might want to consider funding exploration of critical minerals upfront rather than reimbursing it when mining starts. After all, it’s about an era-defining clash between the immoveable object of finite resources and the unstoppable force of their rising demand.