India must prioritize investments in its domestic critical mineral sector to reduce its heavy reliance on imports of cobalt, lithium and nickel, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). Despite having substantial reserves of key minerals such as cobalt and copper, India continues to import nearly 100% of its requirements, leaving it vulnerable to global supply chain disruptions and geopolitical risks.
The IEEFA report, titled India’s Hunt for Critical Minerals, highlights that India has significant reserves, including 44.9 million tonnes of cobalt ore and 163.9 million tonnes of copper, yet lacks domestic production capabilities. The report calls for India to strengthen its ties with resource-rich, trade-friendly nations and develop its own domestic mining and refining capacity.
“There is a need for India to invest in resource-rich, friendly nations and minimize its reliance on imports, especially from countries with potential trade risks in the future,” the report said, pointing out that India’s dependence on foreign sources is expected to persist for at least another decade, as domestic mining projects take years to bear fruit.
The global demand for lithium, nickel, cobalt, and other critical minerals surged in 2023, driven by the increasing use of renewable energy technologies, electric vehicles (EVs) and energy storage systems. Demand for these minerals is expected to double by 2030, making the need for a secure and reliable supply even more urgent.
Cost competitiveness still a key concern for Indian industry
Despite the strategic importance of securing critical mineral supplies, several industry participants argue that cost competitiveness remains the primary concern for India. During a recent visit to the country, sources from the battery and EV sectors indicated that maintaining cost parity with international producers, particularly China, is a bigger issue than securing local raw materials.
“Ultimately, the biggest factor for all our decisions is cost—are we cost-competitive with China?” a battery producer told Fastmarkets. “If we can’t be cost-competitive, our customers will continue to import the cheaper alternative cells.”
In contrast, Western countries often face challenges related to government support and infrastructure gaps, which hinder the adoption of EVs and green energy technologies.
“EV alternatives must be cost-competitive with their ICE [internal combustion engine] counterparts in India, or further adoption could be a challenge,” one OEM source explained.
Government push to strengthen domestic mineral supply
The Indian government has taken steps to address the critical mineral shortage by auctioning exploration rights for strategic mineral blocks. On November 7, 2024, the Ministry of Mines concluded the auction of eight critical mineral blocks, which include cobalt, graphite, phosphorite and vanadium. This brings the total number of critical and strategic mineral blocks auctioned by the government to 22. However, earlier auctions have faced challenges, with several blocks receiving insufficient bids or being canceled altogether.
While these efforts are encouraging, some experts caution that it may take time for India to build the necessary infrastructure and expertise to develop a thriving domestic critical minerals sector. “Since India is a developing economy, there still exists a gap of knowledge and expertise in terms of boosting domestic infrastructure, and it may take some time to set up domestic capacities,” said one trader source.
India’s long-term strategy also includes efforts to acquire critical mineral assets abroad, particularly in Africa and Latin America. The government has been in discussions with these regions to secure a more stable and diversified supply of minerals. A recent joint exploration agreement between Khanij Bidesh India Ltd (KABIL) and Argentina’s CAMYEN company for lithium exploration is an example of such efforts.
KABIL, established in 2019, aims to identify, acquire, and develop critical mineral assets overseas to meet India’s growing demand. According to a government official, these deals will reduce supply volatility and support the development of India’s energy storage sector.
Need for greater government support
Despite these positive steps, some industry participants believe the government needs to take more aggressive action to accelerate the development of India’s critical minerals sector. “We have heard from the customer side that the government should step in and be more aggressive in its support for the market to significantly develop,” said one source.
As India continues to focus on its energy transition and Net Zero goals, securing a stable and cost-effective supply of critical minerals will be crucial to the country’s success in electrifying its transportation sector and advancing its renewable energy capacity.
India’s efforts to develop its domestic critical minerals sector will not only reduce its dependency on imports but also create new opportunities for job growth and innovation in the country’s growing green energy and battery industries. However, achieving these goals will require a more concerted and long-term strategy that balances cost competitiveness with the need for resource security and self-sufficiency.
