Why in the News?
The growing trade war between the U.S. and China, marked by rising tariffs, has drawn attention to rare earth elements and critical minerals.
What is the role of critical minerals in key industries?
- Clean Energy and Digital Technologies: Critical minerals such as lithium, nickel, and cobalt are essential for lithium-ion batteries, which are widely used in electric vehicles (EVs) and portable electronics.
- Renewable Energy Infrastructure: Minerals like dysprosium and neodymium are used in wind turbines, while tellurium, indium, and gallium are critical for solar photovoltaic cells, vital for clean energy generation.
- Defence and Strategic Industries: Rare earth elements are critical for manufacturing missile guidance systems, jet engines, and advanced communication equipment. Eg: Gallium and indium are used in high-frequency radar systems and military-grade semiconductors.
Why is China’s control over rare earths a global concern?
- Supply Chain Vulnerability: China controls over 90% of global rare earth refining and has the largest reserves, making other countries highly dependent on its exports. In May 2025, China’s export restrictions on rare earth magnets led to global panic and supply concerns in the automobile and electronics sectors.
- Geopolitical Leverage: China’s dominance allows it to use rare earths as a strategic tool in trade wars or diplomatic tensions, affecting global industrial stability. In response to U.S. tariffs, China imposed restrictions on rare earths, disrupting supply to key U.S. industries.
- Disruption of Global Industries: Restrictions can hinder production in sectors like renewables, EVs, and defence, slowing global progress in critical technologies. Eg: India’s automobile sector expressed concern about rare earth shortages impacting EV manufacturing and sought government intervention.
How are countries responding to China’s restrictions?
- Diplomatic and Trade Negotiations: Major economies like the U.S. and EU are engaging with China to secure continued access to rare earth supplies. Eg: The U.S.-China framework includes commitments that “Full magnets, and any necessary rare earths, will be supplied… by China.”
- Diversification of Supply Sources: Nations are turning to alternative producers to reduce dependence on China. Eg: Brazil, Saudi Arabia, and Vietnam are actively exploring their critical mineral resources to establish new supply options.
- National Self-Reliance Missions: Countries are launching domestic initiatives to boost exploration, mining, and processing of critical minerals. Eg: India’s National Critical Mineral Mission (2025) aims to conduct 1,200 exploration projects by 2030–31 to bolster local supply chains.
What measures has India taken for mineral self-reliance?
- Launch of the National Critical Mineral Mission (2025): A central initiative aimed at securing India’s future needs in critical and rare minerals. This mission includes plans for 1,200 exploration projects by 2030–31 under the Geological Survey of India.
- Expanding Domestic Exploration & Mining: India is ramping up on-ground efforts to locate and extract critical minerals within its own borders. Eg: The Geological Survey of India is actively spearheading new lithium, cobalt, and rare earth elementexploration programs across several states.
- Building Processing and Supply Chain Ecosystems: The government is promoting infrastructure for domestic processing, refining, and manufacturing related to critical minerals. Eg: Policy support and incentives are being extended to companies to set up mineral processing plants, reducing dependence on foreign sources.
Why is a multi-level strategy needed in this sector?
A multi-level strategy refers to a comprehensive approach that operates on different layers or fronts simultaneously to address a complex issue effectively.
- To Ensure Short-Term Supply Security: Relying on a single country like China for essential minerals creates risks of disruption during geopolitical tensions or trade restrictions. Eg: After China’s 34% tariff and export restrictions in 2025, global industries, including India’s auto sector, faced supply uncertainty.
- To Develop Domestic Capabilities: Long-term resilience requires countries to invest in local exploration, mining, and processing infrastructure. Eg: India launched the National Critical Mineral Mission with plans for 1,200 exploration projects by 2030–31 to reduce import dependence.
Way forward:
- Strengthen International Collaborations for Strategic Reserves: India should forge long-term mineral supply agreements and joint ventures with resource-rich countries. Eg: Bilateral ties with Australia, Argentina, and Africa can help secure lithium and cobalt through assured offtake deals.
- Boost Domestic R&D and Green Mining Technologies: Investing in sustainable exploration, extraction, and recycling technologies will reduce environmental impactand enhance efficiency. Eg: Support for CSIR and private firms in developing indigenous technologies for rare earth processing and battery recycling.
Mains PYQ:
[UPSC 2024] The West is fostering India as an alternative to reduce dependence on China’s supply chain and as a strategic ally to counter China’s political and economic dominance.’ Explain this statement with examples.
Linkage: The article highlights that China dominates the production and reserves of rare earth elements and has placed export restrictions on them, causing panic over supply shortages. This question encapsulates the broader geopolitical and economic context that necessitates India’s strategy to counter China’s dominance and secure critical supplies, such as rare earths.
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