ICRA warns: India's eco-tech jeopardised by mineral imports
ECONOMY & POLICY

ICRA warns: India's eco-tech jeopardised by mineral imports

According to a report by the rating agency Icra, India relies entirely on imports for crucial minerals like lithium, cobalt, and nickel, which are essential for its transition to green technology. The agency expressed concern that this reliance poses a significant risk to India's energy security as it strives to fulfill its net zero commitments by 2070.

In its recent series on critical minerals, ICRA highlighted the subpar quality and quantity of domestically sourced lithium compared to international standards. This could impede India's efforts to decrease its reliance on imports in the near future. Despite the auction of 38 mineral blocks aimed at boosting domestic production, the benefits are not expected to materialise within this decade, leaving India susceptible to potential supply disruptions.

Girishkumar Kadam, Senior Vice-President & Group Head, Corporate Sector Ratings, Icra, stated that global deposits of critical minerals are more concentrated than those of most industrial minerals, fossil fuels, and hydrocarbons. Furthermore, China controls a significant portion (between 65% to 100%) of the global capacity for processing and refining critical minerals like battery-grade lithium, cobalt, manganese, and graphite.

To address the high risk associated with exploring deep-seated or critical minerals compared to surface or bulk minerals, the Government of India has initiated the process of auctioning exploration licenses. This move aims to attract specialized overseas mining companies with a more favorable risk-return framework.

The need to increase domestic production is urgent due to the shift in energy systems from increasing energy density to increasing mineral intensity, which is essential to support the growing adoption of green technologies such as electric vehicles and renewable energy. This shift has accelerated in the post-Covid era, as noted by Icra.

However, Kadam cautioned that due to the early stage of exploration for most of the domestic blocks currently being auctioned, their commercialization and associated benefits are unlikely to fully materialize within the current decade, ending in 2030.

According to a report by the rating agency Icra, India relies entirely on imports for crucial minerals like lithium, cobalt, and nickel, which are essential for its transition to green technology. The agency expressed concern that this reliance poses a significant risk to India's energy security as it strives to fulfill its net zero commitments by 2070. In its recent series on critical minerals, ICRA highlighted the subpar quality and quantity of domestically sourced lithium compared to international standards. This could impede India's efforts to decrease its reliance on imports in the near future. Despite the auction of 38 mineral blocks aimed at boosting domestic production, the benefits are not expected to materialise within this decade, leaving India susceptible to potential supply disruptions. Girishkumar Kadam, Senior Vice-President & Group Head, Corporate Sector Ratings, Icra, stated that global deposits of critical minerals are more concentrated than those of most industrial minerals, fossil fuels, and hydrocarbons. Furthermore, China controls a significant portion (between 65% to 100%) of the global capacity for processing and refining critical minerals like battery-grade lithium, cobalt, manganese, and graphite. To address the high risk associated with exploring deep-seated or critical minerals compared to surface or bulk minerals, the Government of India has initiated the process of auctioning exploration licenses. This move aims to attract specialized overseas mining companies with a more favorable risk-return framework. The need to increase domestic production is urgent due to the shift in energy systems from increasing energy density to increasing mineral intensity, which is essential to support the growing adoption of green technologies such as electric vehicles and renewable energy. This shift has accelerated in the post-Covid era, as noted by Icra. However, Kadam cautioned that due to the early stage of exploration for most of the domestic blocks currently being auctioned, their commercialization and associated benefits are unlikely to fully materialize within the current decade, ending in 2030.

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