Context: India has formally become a part of the US-led Minerals Security Finance Network (MSFN), aimed at securing supply chains for critical minerals. The announcement was made during the United Nations General Assembly.

About Minerals Security Finance Network (MSFN)

• MSFN: A new initiative stemming from the Minerals Security Partnership (MSP), established by the US in 2022.

• Objective: To reduce dependency on a few countries, particularly China, and ensure diverse, secure, and sustainable supply chains for critical minerals.

• India’s Induction: India joined the MSP in 2023 and is now part of the MSFN.

• Members: The MSFN includes 14 countries and the European Union, working together to secure critical mineral supply chains.

Objectives of MSFN

• Strengthening cooperation, promoting information exchange, and co-financing among member nations.

• Advancing diverse, secure, and sustainable supply chains for critical minerals.

• Mobilizing private sector capital in projects related to mineral production, extraction, processing, recycling, and recovery.

Key Features of MSFN

• Cooperation Between DFIs and ECAs: Development finance institutions (DFIs) and export credit agencies (ECAs) from participating nations collaborate to meet the global demand for critical minerals.

• Private and Public Sector Collaboration: The partnership encourages synergy between private and public sectors to deploy capital into new and existing critical mineral markets.

• Supply Chain Resilience: Focus on enhancing the resilience of supply chains for critical minerals like cobalt, lithium, nickel, and rare earth elements.

About Minerals Security Partnership (MSP)

• It is a collaboration between 14 countries and the European Union aimed at catalyzing public and private investment in responsible critical mineral supply chains.

• India’s Membership: India joined MSP in 2023.

• Focus Areas: The MSP concentrates on minerals essential for clean energy technologies, such as- Lithium, cobalt, nickel, manganese, graphite, rare earth elements, and copper.

Critical Minerals and Their Importance

• Economic Growth: Cobalt, nickel, and lithium are crucial for industries like telecommunications and electric vehicle (EV) battery manufacturing.

• Clean Energy: These minerals are vital for green technologies, including semiconductors, solar panels, and wind turbines.

• National Security and Defence: Minerals like bauxite, alumina, and silica are essential for producing military equipment and infrastructure.

Global Context: China’s Dominance

• Dependence on China: China holds around 70% of the global production of rare earth elements (REEs).

• Supply Chain Concentration: China’s dominance in the processing and supply of minerals like cobalt and rare earths has prompted initiatives like the MSFN to diversify sources.

India’s Initiatives to Secure Critical Minerals:

• Amendment to Mines and Minerals (Development and Regulation) Act, 2023: Enables mining concessions for 24 critical and strategic minerals.

• Critical Minerals Identification: India has identified 30 critical minerals crucial for self-reliance.

• Partnerships: India has partnered with Australia for lithium and cobalt and with Argentina for lithium supply.

• Khanij Bidesh India Ltd. (KABIL): Tasked with acquiring overseas mineral assets like lithium and cobalt for strategic needs.

India’s Role in Critical Mineral Supply Chains

• Strategic Shift: India is working to secure critical minerals essential for its growth, particularly in the EV sector and electronics manufacturing.

• Clean Energy Transition: India’s focus on clean energy technologies underlines the need for a reliable supply of minerals like lithium and cobalt.

• Diplomatic Push: India has successfully lobbied to become a part of the MSP and MSFN to reduce dependency on China for critical minerals.

Significance of the MSP and MSFN

• Collaborative Projects: The MSP is exploring collaboration on approximately 150 projects related to mineral supply chains, with 12 shortlisted for immediate action.

• Focus Areas: These include developing battery materials, sharing expertise, and setting up mineral processing facilities in South America.

• Critical Minerals for Clean Energy: The MSP and MSFN focus on minerals required for EV batteries and renewable energy technologies, ensuring global energy transition goals are met.