Demand for Critical Minerals Surges Amidst Global Clean Energy Transition

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As the world takes decisive steps towards embracing clean energy technologies and transitioning to a sustainable future, the demand for critical minerals has reached unprecedented heights. Essential minerals such as lithium, cobalt, nickel, and copper play a pivotal role in powering electric vehicles, solar panels, wind turbines, and other clean energy devices. However, this surge in demand has outpaced the supply of these critical minerals, leading to significant challenges and concerns.

China’s Dominance and Supply Risk:

China’s dominant position in the supply of crucial materials for the green transition raises concerns about potential supply risks. Recent restrictions imposed by China on the export of important metals like Gallium and Germanium have underscored the dangers of relying heavily on a single country for the supply of these essential materials.

Understanding Critical Minerals:

Critical minerals are minerals that hold paramount importance for economic development and national security. The scarcity or concentration of extraction and processing in limited geographical locations can lead to supply chain vulnerabilities and disruptions in supplies. India has identified a set of 30 critical minerals, and to ensure a steady supply of these minerals to the domestic market, the country has set up the Khanij Bidesh India Limited (KABIL), a joint venture of three public sector companies.

Current Global Scenario for Critical Minerals:

The demand for energy transition minerals (critical minerals) has witnessed a rapid surge in recent years. From 2017 to 2022, the demand for lithium tripled, cobalt increased by 70%, and nickel rose by 40%, mainly driven by the energy sector. The market for energy transition minerals reached $320 billion in 2022, according to the International Energy Agency (IEA), and it is expected to continue growing rapidly.

Global Efforts to Ensure Reliable Supply Chains:

In light of uncertain global supply chains, countries are adopting new policies to diversify their mineral supplies. Nations like the United States, Canada, the European Union, and Australia have enacted regulatory legislation, while resource-rich countries such as Indonesia, Namibia, and Zimbabwe have imposed restrictions on the export of unprocessed mineral ores.

Challenges Faced by India in Critical Mineral Supply Chains:

India faces both global and domestic challenges in ensuring reliable supply chains for critical minerals. The ongoing impact of Covid-19 on China’s mining and export capabilities poses significant risks. Additionally, the Russia-Ukraine conflict has implications for the supply chains of critical minerals, considering Russia’s role as a major producer of various essential metals and Ukraine’s significance in titanium and rare earth elements.

Strategies to Mitigate Challenges:

To keep up with the rapid growth in demand for critical minerals, assessing global supply capabilities is crucial. Diversifying sources of supply can reduce vulnerability to disruptions caused by geopolitical factors or trade restrictions. Evaluating domestic reserves and exploring sustainable extraction methods will ensure a steady supply.

Financial considerations, including innovative financing options and international collaborations, will be instrumental in mobilizing the capital required for a successful energy transition. Investing in technology and fostering domestic technological capabilities will drive clean energy solutions forward.

The Way Forward:

Ensuring resource availability, adopting innovative financing models, and investing in technology will be essential for a successful clean energy transition. Collaborations with academia and industry will help accelerate research and development in clean energy technologies. By addressing the challenges of critical minerals, the world can move closer to a sustainable future powered by clean energy solutions.

The global community must unite in its efforts to secure reliable and diversified critical mineral supplies, ensuring that the clean energy revolution can progress unimpeded towards a greener and more sustainable tomorrow.

Source:

https://www.drishtiias.com/daily-updates/daily-news-editorials/demand-for-critical-minerals-across-the-globe#:~:text=What%20is%20the%20Current%20Scenario,driven%20by%20the%20energy%20sector.

https://www.livemint.com/industry/energy/surge-in-demand-for-critical-minerals-driven-by-clean-energy-technologies-market-doubles-in-size-11689065002778.html

https://www.iea.org/news/critical-minerals-market-sees-unprecedented-growth-as-clean-energy-demand-drives-strong-increase-in-investment

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