Opinion: India Woke Up Late To Climate Threat. Better Late Than Never

On Wednesday, a day before the start of the COP28 meeting in Dubai, India took a significant step to secure its supply chain for critical green minerals like nickel, lithium, cobalt, and rare earth materials required to facilitate its green transition. It launched the country's first-ever auction of 20 blocks of critical and strategic minerals spread across the country.

In September, India used its chairmanship of the G20 to shepherd a consensus agreement on ensuring a sustainable supply of such critical minerals within the framework of the "market economy and international trade rules".

The presence of representatives of key G20 countries - United States, European Union, Australia and Argentina - all of whom echoed the agreement inked earlier this year, only confirmed the method in the plan among the like-minded to secure global supply chains. This may be too little, too late though.

Already the world's ambitions of managing a green transition are hostage to the combined challenge of mining in dangerous locations and China's dominance in processing. And, we know so well, especially in the aftermath of the covid pandemic, that supply chains are only as good as the weakest link.

This apprehension was reinforced with China kicking off curbs on graphite, a key material in EV batteries. The restrictions, which begin from 1 December, mean a license is needed for export. The move, seen as retaliation to the curbs imposed by the US on high-end silicon chips, only confirms the worst fears about the vulnerability of the global supply chain for critical green minerals.

Conflict Green Minerals

The path to net zero implies a pivot to renewable energy and this in turn requires access to critical minerals, metals and rare earth elements.

The problem is that most of these green minerals are located in countries with unstable regimes and prone to rampant corruption. As a result, the supply chain for these so-called conflict green minerals is inherently unstable.

What is worse, over the last two decades, China has inserted itself as an intermediary in the supply chain, leaving it in a position to weaponise access and hold the world's green ambitions hostage.

China did precisely that, as the world's largest supplier, when it imposed curbs on the export of synthetic and natural graphite. Given the adverse turn in geopolitics, especially the acceleration in decoupling between the US and China, this outcome is likely to occur more frequently.

History has shown us the damage a clutch of global oil producers can exact on the world. Indeed, if this is a cause for concern, the sourcing of critical green materials leaves the world equally vulnerable. 

According to a recent study conducted by the Aspen Institute and submitted to the US Congress, the top three producers of critical green minerals control over 50 per cent of global production. In some instances, like lithium, rare earth elements, cobalt and manganese, the share of the top three is more than three quarters of global production.

The dominance of China in the processing of critical minerals is staggering. According to the Aspen study, in 2019, China's market share in total global processing was 35 per cent for nickel, 40 per cent for copper, 58 per cent for lithium, 65 per cent for cobalt and 87 per cent for rare earth minerals.

Worse, this geographic dominance is unlikely to be reversed in the next decade - the period in which the world has to accelerate climate action to avoid global temperatures topping the ceiling of 1.5 degrees centigrade above pre-industrial levels.

Projections by the World Energy Outlook (WEO) 2023, released a few weeks ago by the International Energy Agency (IEA), reveals that in 2030 China's share in refined cobalt production will remain unchanged, while it will drop marginally for lithium chemicals and yet account for over 50 per cent of global production.

India's Plan

According to an internal committee appointed by the Ministry of Mines, India has an import reliance in 15 green minerals. In the case of 10 minerals, India is completely dependent on imports; it sources part of its supplies, including for lithium, cobalt, and nickel, from China.

While India woke up rather late to the strategic threat relating to the supply chain of critical green minerals, it has initiated a response on multiple fronts.

At one level, it is pursuing, in coordination with other key members, multilateral solutions at the G20 forum. At another, it has also engaged in mini-laterals, like the Minerals Security Partnership (MSP), which now includes 14 member countries piloted by the US.

Finally, it has launched efforts, beginning with the auction announcement on Thursday, to locate green minerals within India's borders.

This rear-guard action should be welcomed and may return dividends in the long run. Until then, the world will be walking on eggshells while managing the desired energy transitions by relying on such a vulnerable supply chain.

(Anil Padmanabhan is a journalist who writes on the intersection of politics and economics.)

Disclaimer: These are the personal opinions of the author.

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