Context: India and Australia have decided to strengthen their partnership in the field of projects and supply chains for critical minerals.

• Australia has confirmed that it would commit $5.8 million to the three-year India-Australia Critical Minerals Investment Partnership”.

What are Critical Minerals?

• Critical minerals are elements that are the building blocks of essential modern-day technologies, and are at risk of supply chain disruptions.

• These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines.

• Based on their individual needs and strategic considerations, different countries create their own lists.

• However, such lists mostly include graphite, lithium, cobalt, rare earths and silicon which is a key mineral for making computer chips, solar panels and batteries.

• Aerospace, communications and defence industries also rely on several such minerals as they are used in manufacturing fighter jets, drones, radio sets and other critical equipment.

Why is this resource critical?

• As countries around the world scale up their transition towards clean energy and digital economy, these critical resources are key to the ecosystem that fuels this change.

• Any supply shock can severely imperil the economy and strategic autonomy of a country over-dependent on others to procure critical minerals.

• But these supply risks exist due to rare availability, growing demand and complex processing value chain.

• Many times the complex supply chain can be disrupted by hostile regimes, or due to politically unstable regions.

• They are critical as the world is fast shifting from a fossil fuel-intensive to a mineral-intensive energy system.

What is China ‘threat’?

• China is the world’s largest producer of 16 critical minerals.

• China alone is responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.

• The level of concentration is even higher for processing operations, where China has a strong presence across the board.

• China’s share of refining is around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.

• It also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.

• In 2010, China suspended rare earth exports to Japan for two months over a territorial dispute.

What are countries around the world doing about it?

• US has shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.

• India has set up KABIL or the Khanij Bidesh India Limited to ensure mineral security of the nation.

• Australia’s Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.

• The UK has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals.