The government has been attentive to the need for ensuring the supply of critical minerals for India’s requirements. The March 2020 amendment to the Mines and Minerals (Development and Regulation) Act took account of the need for continued mining of chromite and manganese. In August 2019, three mineral-sector PSUs set up a joint venture, named Kabil, to acquire critical mineral assets outside India. But India’s own geological potential can support greater mining and processing at home, to achieve strategic-, economic- and trade-related objectives. A look at what the US is doing is instructive.
The Donald Trump administration, which has consistently worked to rebuild the US’ mining industry, included “mining and production of critical minerals, materials, and associated supply chains” among its Essential Critical Infrastructure. Mineral industries in these sectors maintained their work schedules even during lockdown. The companies are busy working on critical minerals, particularly rare earths, having discovered how vulnerable their dependence on China made them. California’s MP rare earths mine, once the world’s biggest, which closed in 2015, reopened mining operations last year, but had to send its material to China for processing, due to lack of refining capacity in the US. At the height of the US-China trade standoff in May last year, China’s President Xi Jinping pointedly visited a rare earths processing plant to highlight China’s capabilities; and then in June, China raised tariffs on imported rare-earth minerals. The US got the message. The US Army had offered to help fund rare-earth refineries in the USA; and in December 2019, two companies developing a big new reserve of rare earths in Texas, opened a pilot processing plant in Colorado, which expects to start releasing refined products by mid 2020. Overall, the US companies are reported to have ramped up production of rare earth concentrates by 40 per cent in 2019. The US is also working on an alliance with Australia to ensure rare-earth resource availability.
In 2010, Japan faced a cut off of rare-earth deliveries from China because of political tensions; it then sought to build a joint venture with India to process rare earths, which unfortunately did not take off. It may be time to revisit such plans. (Japan had helped financing of Lynas Corporation’s processing plant in Malaysia and just moved on from us.)
Looking ahead, we should also review regulatory bottlenecks, which have held back the development of gold mines in India, despite our geological potential. Currency volatility in the world has accelerated flights to safe havens like gold. India’s silver production has gone up to 10 times its levels of a decade ago, riding on the back of increased zinc mining and refining. Increasing gold production will yield even greater economic and strategic benefits.
The author is a former foreign secretary