India’s firmer attempts at mineral diplomacy

The moves are to reduce India’s strategic vulnerability, but there are issues that need to be resolved

As India seeks to expand its manufacturing and technological capability, critical minerals will become vital to fulfil this ambition. However, India, a major critical mineral importer, still depends on other countries, primarily China, for its mineral security, which has become a cause of strategic concern. Union Defence Minister Rajnath Singh, who voiced India’s apprehensions at a defence think tank gathering, said, “While [the] scramble for resources for economic reasons has had a long history, their weaponisation by some nations for strategic reasons is a comparatively new phenomenon”, hinting at Chinese attempts. To address India’s mineral security challenge, which is aimed at reducing its strategic vulnerability, New Delhi has started an attempt to engage in mineral diplomacy.

Establishing joint ventures

Also read: How is India’s hunt for critical minerals going? | Explained 

This attempt is based on the pillars of: developing international engagement with mineral-producing countries, and establishing strategic partnerships with intergovernmental organisations. The first pillar focuses on building bilateral ties with resource-rich countries such as Australia, Argentina, the United States, Russia, and Kazakhstan to secure the supply of lithium and cobalt. To facilitate this vision, post-2019, India established the Khanij Bidesh India Ltd. (KABIL), a joint venture company with a mandate “to ensure a consistent supply of critical and strategic minerals to the Indian domestic market”. The objective was to achieve mineral security by securing agreements, and acquisitions through government-to-government, government-to-business, and business-to-business routes.

In March 2022, KABIL signed a Memorandum of understanding with Australia for a critical mineral investment partnership, identifying two lithium and three cobalt projects. Latin America’s Lithium Triangle, which constitutes Argentina, Chile, and Bolivia, has also attracted India’s attention. In January 2024, India signed a $24 million lithium exploration pact with a state-owned enterprise in Argentina for five lithium brine blocks. KABIL is also actively working to secure mineral supplies by facilitating the buying of assets from Bolivia and Chile. Apart from the government, India’s private sector has also benefited. Altmin Private Limited signed an agreement with YLB, Bolivia’s national company, to secure the raw material supply chain of Li-ion batteries.

Central Asia has also caught India’s attention. Recently, India and Kazakhstan formed a joint venture, IREUK Titanium Limited, to produce titanium slag in India. This was one of India’s first joint ventures with the Central Asian Republics. This attempt is aligned with New Delhi’s proposal to establish an India-Central Asia Rare Earths Forum to leverage the region’s rich resources.

Cooperative engagements

The second pillar of mineral diplomacy is international engagement, which is forging and strengthening partnerships with minilateral and multilateral initiatives related to mineral security, such as the Quad (Australia, Japan, India, the United States), the Indo-Pacific Economic Framework for Prosperity (IPEF), Mineral Security Partnership (MSP) and the G-7, for cooperation in the critical mineral supply chain. These cooperative engagements aim to align India with the global best practices in the critical mineral sector across its three segments — upstream, midstream, and downstream.

Additionally, they also facilitate knowledge sharing and capacity building, which is important for coordinating with international partners such as the U.S., the European Union (EU), South Korea, and Australia.

To further this collaboration with western partners, India’s Ministry of Mines signed a MoU with the International Energy Agency to strengthen cooperation on critical minerals, helping India to “streamline its policies, regulations, and investment strategies in the critical mineral sector, aligning them with global standards and best practices”.

The missing pieces

India’s attempt at mineral diplomacy has led to many positive outcomes, but still lacks three essential ingredients required for its international diplomatic engagement. These are: a lack of private sector participation; weak diplomatic capacity, and insufficient sustainable partnership. Also, India’s private sector has largely been missing from the equation.

The absence of a critical mineral supply chain strategy and a clear road map for the private sector are two primary variables responsible for the lack of policy clarity, leading to their absenteeism. To address these, India needs to formulate a comprehensive approach for de-risking, considering the role of the private sector across the supply chain. An important step would be to have a supply chain strategy based on India’s growth prospects and national security priorities.

Second, India must strengthen its mineral diplomacy engagement. Having a dedicated mineral diplomacy division within the Ministry of External Affairs, similar to the New and Emerging Strategic Technologies (NEST) division and a special position for mineral diplomacy in selected diplomatic missions can be the first step.

Third, India’s goal towards mineral security necessitates that New Delhi forge strategic, sustainable, and trusted partnerships with bilateral partners and multilateral forums. Among all its partners, working with EU, South Korea, and the other Quad members is critical to India’s mineral security due to its domestic capabilities, diplomatic network and technological know-how. If these issues can be resolved, India’s attempts at mineral diplomacy will gain strength and will be able to better complement New Delhi’s domestic critical mineral initiatives, which are currently moving at a slow pace.

Abhishek Sharma is a Research Assistant with the Observer Research Foundation’s Strategic Studies Programme

Published - December 16, 2024 12:08 am IST