Although China currently dominates the critical minerals supply chain, an India-Australia partnership can form an important counterbalance
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In global geopolitics, critical minerals are the new oil, vital for green energy and technology. As the need for sustainability rises, control over these resources is key. India is stepping up, forging strategic partnerships to navigate critical mineral diplomacy and counter China's dominance in supply chains.
Critical minerals are vital for economic development and national security. Their scarcity or concentration in specific regions can lead to supply chain vulnerabilities. India is now actively addressing these risks while competing with China’s dominance. Although China controls rare earth mining for electric vehicles (EVs) and wind power, it does not dominate upstream production. Australia and Chile lead in lithium extraction, accounting for more than a 70 percent cent share; the Democratic Republic of Congo (DRC) produces nearly 70 percent of the world’s cobalt, and Indonesia’s share in nickel extraction is the largest at over 30 percent, highlighting the need for diverse and resilient supply chains.
China excels in the midstream and downstream segments of critical minerals supply chains, processing 68 percent of the world’s nickel, 40 percent of copper, 59 percent of lithium, and 73 percent of cobalt.
China excels in the midstream and downstream segments of critical minerals supply chains, processing 68 percent of the world’s nickel, 40 percent of copper, 59 percent of lithium, and 73 percent of cobalt. It leads in manufacturing battery cell components, producing 70 percent of cathodes, 85 percent of anodes, 66 percent of separators, and 62 percent of electrolytes.
China holds 78 percent of the world’s EV battery cell manufacturing capacity and hosts three-fourths of the world’s lithium-ion battery mega-factories, making it the largest consumer of the minerals it refines. Beyond refining and battery production, China’s influence spans the entire critical minerals market, consolidating its global power, as it leads in the production of 29 commodities, including 22 metals and seven industrial minerals.
Beijing has imposed export restrictions on critical minerals like graphite and is considering further measures to secure its dominance by limiting the export of refining technologies.
Chinese companies have invested in at least 29 lithium projects across Latin America and Africa, targeting nickel and cobalt to diversify their control over mineral resources. Investments in mining projects abroad, such as cobalt mines in the DRC, which account for 60 percent of cobalt ore, ensure a steady supply of resources. These global investments reinforce China’s leverage in the critical minerals market, allowing it to use supply chain dominance as a geopolitical tool. China’s National Plan for Mineral Resources (2016-2020) highlights its careful steps to shield itself from potential supply chain vulnerabilities.
This dominance of China has, thus, driven India to forge bilateral and multilateral partnerships with Western countries and bolster domestic clean energy manufacturing and mineral resources to mitigate geopolitical risks and supply chain vulnerabilities.
Given India’s reliance on imports, especially from China, building domestic capacity and securing international partnerships is vital to mitigate supply chain disruptions and geopolitical risks.
In line with these international collaborations, India’s 2024-25 Budget introduces the Critical Mineral Mission, targeting 30 crucial minerals like lithium and cobalt for defence, telecom, and high-tech industries. This initiative aims to boost domestic production, enhance recycling, and secure international acquisitions. Given India’s reliance on imports, especially from China, building domestic capacity and securing international partnerships is vital to mitigate supply chain disruptions and geopolitical risks. As global demand for critical minerals is expected to quadruple by 2040 under the sustainable development scenario and increase sixfold under the net-zero scenario, as per the International Energy Agency, meeting this demand sustainably and responsibly is a pressing challenge.
However, China’s control over the critical minerals value chain complicates responsible sourcing, highlighting the need for sustainable practices and global cooperation. Although China has Due Diligence Guidelines for Responsible Mineral Supply Chains, their voluntary nature limits their effectiveness. The 2021 Global Witness report found due diligence enforcement lacking and called for greater transparency and responsible conduct from Chinese refiners. Recent severe allegations against Chinese firms in the DRC include corruption, forced evictions, child labour, and other human rights violations through subcontracting.
Australia produces nearly half of the world's lithium and is the second-largest producer of cobalt and the fourth-largest producer of rare earths. As a significant player in critical mineral mining, it could be a possible partner for India. India’s collaboration with Australia ensures transparency and ethical practices in the global supply chain. These partnerships emphasise global unity and sustainable practices, securing mineral wealth for future generations. India’s critical minerals diplomacy intends to integrate sustainability considerations into its approach, benefiting from Australia’s leadership in responsible projects and ensuring seamless coordination from extraction to production.
India’s critical minerals diplomacy intends to integrate sustainability considerations into its approach, benefiting from Australia’s leadership in responsible projects and ensuring seamless coordination from extraction to production.
Partnering with Australia, a leader in responsible mining, aligns with India’s goals for a resilient and ethical supply chain. The former’s focus on due diligence and traceability ensures sustainable market access. Their projects benefit communities, promote equality, and showcase sustainable practices. Collaborations like the Australia-India Critical Minerals Research Hub foster innovation in sustainable mining. Thus, Australia, one of the top producers of lithium, cobalt, and rare earths, offers significant benefits to India’s critical mineral supply chain.
As global demand for critical minerals rises, India’s strategic partnerships with Australia enhance supply chain resilience and promote responsible sourcing. These collaborations secure access to resources like lithium and cobalt while fostering sustainable practices that benefit communities and the environment. India’s commitment to ethical and sustainable practices is crucial for shaping a secure global supply chain and ensuring a responsible transition to a low-carbon economy for future generations.
Manish Vaid is a Junior Fellow at the Observer Research Foundation
Sriparna Pathak is an Associate Professor with the China Studies department at O.P. Jindal Global University.
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Manish Vaid is a Junior Fellow at ORF. His research focuses on energy issues, geopolitics, crossborder energy and regional trade (including FTAs), climate change, migration, ...
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Dr. Sriparna Pathak is an Associate Professor and the founding Director of the Centre for Northeast Asian Studies at O.P. Jindal Global University, (JGU) Haryana, ...
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