Relevance: GS-3: Conservation, Environmental Pollution, and Degradation, Environmental Impact Assessment.

Key Phrases: Mineral Security Partnership (MSP), Critical minerals, Supply shock, Khanij Bidesh India Limited, Clean Energy Transitions, International Energy Agency, net-zero, and energy transition goals, Sustainable exploration.

Why in News?

• Recently, the US government’s state department put out a press release on the formation of an international Mineral Security Partnership (MSP).
• The MSP countries are Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the UK, the US, and the European Commission.
• The partnership was announced at the world’s largest mining event, held in Toronto.

Why is this resource critical?

• As countries around the world scale up their transition towards clean energy and digital economy, these critical resources are key to the ecosystem that fuels this change.
• Any supply shock can severely imperil the economy and strategic autonomy of a country over-dependent on others to procure critical minerals.
• But these supply risks exist due to rare availability, growing demand, and complex processing value chain.
• Many times, the complex supply chain can be disrupted by hostile regimes, or due to politically unstable regions.
• As per the US the world transitions to a clean energy economy, global demand for these critical minerals is set to skyrocket by 400-600 percent over the next several decades, and, for minerals such as lithium and graphite used in electric vehicles (EV) batteries, demand will increase by even more — as much as 4,000 percent.
• They are critical as the world is fast shifting from a fossil fuel-intensive to a mineral-intensive energy system.

Need for the Mineral Security Partnership:

• The goal of the MSP is to ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments.
• Demand for critical minerals, which are essential for clean energy and other technologies, is projected to expand significantly in the coming decades.
• The MSP will help catalyse investment from governments and the private sector for strategic opportunities —across the full value chain —that adhere to the highest environmental, social, and governance standards.
• The MSP is more than the sustainable exploration, production, and processing of critical minerals. It is about ensuring the availability of these minerals to MSP countries for their net-zero and energy transition goals. It is something for many developing countries, including India, to ponder over.

Production and processing of critical minerals:

• According to a report released by the International Energy Agency in 2021, the major producers of critical minerals globally are Chile, Indonesia, Congo, China, Australia, and South Africa.
• When it comes to processing, China dominates by a long stretch. Others are Indonesia, Chile, and Japan.
• In the MSP, none of these countries, except Japan and Australia, are represented.

What is China ‘threat’?

• According to the 2019 USGS ( US Geological Survey) Mineral Commodity Summaries report, China is the world’s largest producer of 16 critical minerals.
• China, according to a report on the role of critical minerals by the International Energy Agency, is responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.
• The level of concentration is even higher for processing operations, where China has a strong presence across the board.
• China’s share of refining is around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.
• It also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.

India’s efforts:

• India has set up KABIL or the Khanij Bidesh India Limited, a joint venture of three public sector companies- National Aluminium Company Limited (NALCO), Hindustan Copper Limited (HCL), and Mineral Exploration Corporation Limited (MECL) to “ensure a consistent supply of critical and strategic minerals to the Indian domestic market”.

The Role of Critical Minerals in Clean Energy Transitions:

• In a scenario that meets the Paris Agreement goals, clean energy technologies’ share of total demand rises significantly over the next two decades to over 40% for copper and rare earth elements, 60-70% for nickel and cobalt, and almost 90% for lithium.
• EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end-user of nickel by 2040.
• Solar photovoltaic plants, wind farms, and electric vehicles generally require more critical minerals to build than their fossil fuel-based counterparts.
• A typical electric car requires six times the mineral inputs of a conventional car and an offshore wind plant requires thirteen times more mineral resources than a similarly sized gas-fired plant.
• Since 2010 the average amount of mineral resources needed for a new unit of power generation capacity has increased by 50% as the share of renewables in new investment has risen.

Conclusion:

• The key areas that will help realize the role of critical minerals in the clean energy transition include international cooperation through technology, research and development, regulatory policy, and due diligence of all the stakeholders involved across the value chain.
• Critical minerals have a pivotal role to play in the clean energy transitions but that can only happen if the major players contribute to industrial reforms and transition to low-carbon technologies at every key stage of extraction, processing, and supply of the critical minerals and Mineral Security Partnership (MSP) can be a major step in this direction.

Source: Live-Mint

Mains Question:

Q. How can the Mineral Security Partnership (MSP) play a pivotal role in clean energy transitions and the development of the global economy? Discuss.