Critical minerals like Cobalt, Nickel, Lithium to drive energy transition in India

Criticality of critical minerals: Asian countries are key players in the critical minerals supply chain, with geopolitics already affecting exports from China, the Asia Sustainability Outlook Report 2024 by Morgan Stanley said on Thursday. The report highlights two aspects to watch out for, first, to develop alternatives and second to factor in the ESG risks of critical minerals. According to Morgan Stanley, critical minerals play a paramount role in the energy transition. Decarbonization and low-carbon technologies including electric vehicles, renewable energy, and energy storage rely on critical minerals. 

Critical minerals are very important for cleantech solutions. Cleantech solutions are more mineral-intensive than their fossil fuel counterparts. “For example, a typical electric car requires six times the mineral inputs of an ICEV, while an onshore wind plant requires nine times more mineral resources than a gas-fired plant per the IEA,” Morgan Stanley’s report stated. 

As the nations are having a sprint against time to transition towards sustainable and green solutions, the need for critical minerals is expected to go up. “The energy transition is accounting for an increasingly large amount of critical minerals. Taking copper as an example, clean tech is expected to represent 44 per cent of copper demand by 2030 (+22ppt from 2020), per IEA estimates,” Morgan Stanley added. 

India’s  Critical Mineral 

The government in 2023 also identifies the list of 30 critical minerals in India. The committee has identified a set of 30 critical minerals. These are Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium. 

India has no crucial minerals like Lithium, Cobalt, Nickel, Vanadium, etc. In 2020, 100 per cent of Lithium consumed in India was imported from Chile, Russia, China, Ireland, and Belgium. Similarly,  Cobalt 100 per cent of consumption was met by importing from China, Belgium, the Netherlands, the US, and Japan. And 100 per cent of Nickel consumption was met via importing from  Sweden, China, Indonesia, Japan, Philippines 4. Vanadium 100% Kuwait, Germany, South Africa, Brazil, Thailand.

The government is making sustained efforts to find alternatives to these critical minerals in India. And a lot of work is being done by the Ministry of Mines to expedite the exploration of these critical minerals. 

Key Players 

According to the report by Morgan Stanley, Asian countries, especially China, Indonesia, and Australia, are key players in the critical minerals supply chain. “As of 2022, Asian countries dominate the mining of nickel, lithium, graphite, and rare earth elements (REEs). Among them, China is a top 3 producer of REEs, graphite, and lithium,” the report by Morgan Stanley highlighted. 

Australia also plays a dominant role in mining lithium and cobalt. In the processing of critical minerals, China is among the top 3 for selected critical minerals, accounting for the majority of market share for the processing of cobalt, lithium, graphite, and REEs as of 2022. That said, China is also reliant on other countries for its raw material imports, spanning across Asia, Africa and South America

“The demand and supply of critical minerals could be complicated by technological innovations. As cleantech develops, the alternatives to current clean tech could affect the demand for critical minerals in the future,” the report opined.  

For example, lithium-ion batteries that are widely used in electrical vehicles could be disrupted by sodium-ion batteries. In that case, the use of critical minerals like lithium and cobalt might be replaced by more abundant materials like sodium. Similarly, the maturity of silicon-based anodes, lithium metal anodes, and aluminum anodes could work instead of graphite-based anodes and reduce the demand for graphite. 

ESG Risks On the Way 

The report added that ESG risks should be considered on top of supply chain dynamics when it comes to critical minerals, despite their critical roles in clean tech and energy transition. 

“As such, we presented a list of common ESG risks and considerations that are associated with mining practices.  Key ESG risks include water scarcity and pollution, impact on biodiversity, impact on indigenous people's rights or local community, labour conditions, etc,” the report added. 

The report added further that producers or nations exposed to the relevant regions and mines could be challenged with even stronger scrutiny, controls, and disruptions to the supply chains. Producers might face stronger pressure for transparent disclosures and traceability systems around supply chains.