In a China-dominated mineral market, India’s fastest path to resilience lies not in new mines, but in building a strategic recycling loop
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This is 191st in the 'China Chronicle' Series.
China’s grip over rare earths and other critical minerals is usually explained through mines, export controls, and processing dominance. But behind these visible tools lies a quieter strength, a carefully built domestic mineral loop. In this system, mining, processing, use, and recycling are treated as one continuous chain, not separate stages. The payoff is practical. When exports slow, prices jump, or geopolitics tighten, Chinese factories are better insulated and keep running. Recycling and resource efficiency have become the stabilising core of this strategy.
For India, which has only recently begun incentivising critical mineral recycling under the National Critical Mineral Mission, the task is not to emulate China’s state-led model or its environmental trade-offs, but to adapt the underlying logic to Indian conditions by using recycling and resource efficiency as a strategic buffer while mining and overseas sourcing gradually scale up. This means borrowing some design principles from China’s mineral loop, such as treating scrap as a strategic resource and aligning collection, processing, and demand — without inheriting its over-centralisation or ecological costs.
China’s tightening of export controls on rare earths, magnets, and dual-use materials in 2024–25 exposed global dependence on a single processing hub. Automotive, electronics, and defence industries faced supply strains and price volatility. Yet domestically, Beijing insulated its own supply chains by leaning on recycling and circular flows.
Over the past decade, successive circular-economy plans, including the 14th Five-Year Plan for Circular Economy Development, have embedded the recovery of rare earths, battery metals, and strategic alloys into national strategy. Recycling became a hedge against supply disruptions and resource nationalism.
For India, China’s experience offers two lessons. First, early industrial-scale recycling, backed by policy support, can reduce vulnerability and dampen geopolitical exposure.
The results are visible in industrial practice. JL Mag Rare-Earth, the world’s largest magnet producer, applied grain-boundary diffusion to reduce heavy rare earth use and sourced roughly 30 percent of its 2024 inputs, 2,575 tonnes, from recycled scrap. Battery manufacturers such as CATL and GEM Co. Ltd. report recovery rates exceeding 99.6 percent for nickel and cobalt and 96.5 percent for lithium from spent batteries. By closing the loop between production and recovery, China turns critical minerals from one-time extraction assets into semi-renewable strategic resources.
For India, China’s experience offers two lessons. First, early industrial-scale recycling, backed by policy support, can reduce vulnerability and dampen geopolitical exposure. However, the Chinese system has relied on heavy subsidies and tight administrative control, resulting in environmental strain in mining regions. Second, India can adopt integrated planning, set recovery targets, and enhance processing capacity without replicating centralised control or environmental compromise. The task is to import the logic, not the model.
India enters this landscape from a very different position. It remains heavily import-dependent for lithium, cobalt, nickel, and rare earths. Mining projects face long gestation periods, regulatory hurdles, and social resistance. Each delay increases import bills and deepens exposure to supply shocks. Recycling, therefore, is not a backup plan; it is the fastest lever available.
In 2025, New Delhi operationalised an INR 1,500 crore incentive scheme under the NCMM to promote the recovery of critical minerals from batteries, e-waste, and industrial residues. The objectives are to build a domestic secondary supply, hedge against external shocks, and reduce the environmental pressures associated with extraction. Private investments in battery and electronics recycling indicate early momentum.
Crucially, recycling has now been elevated beyond industrial policy. At the G20 Summit in November 2025, Prime Minister Narendra Modi proposed a Critical Minerals Initiative, framing mineral security, recycling, and cooperation among trusted partners as shared global priorities.
This complements engagement in platforms such as the US-led Minerals Security Partnership (MSP), which coordinates mining, processing, and recycling investments through its Finance Network. The recent launch of the Forum on Resource Geostrategic Engagement (FORGE) at the Critical Minerals Ministerial builds on this architecture, signalling a shift toward more structured and action-oriented coordination across trusted partners.
As China tightens exports and competitors scramble, India’s growing e-waste volumes and rising battery retirements become strategic assets. A credible recycling ecosystem could position India as a regional hub for reclaimed minerals while sparing land and water from intensive mining.
India’s approach reflects both similarities and differences with China. The similarities include treating recycling as strategic infrastructure, using public incentives to crowd in private investment, and integrating recovery into EV, renewable, and electronics policies so that factories are designed around closed loops. The differences are deliberate, including a decentralised ecosystem of recyclers, stronger transparency and environmental safeguards, and reliance on international partnerships for technology and capital.
Recycling is now a pillar of economic resilience, not merely waste management. As China tightens exports and competitors scramble, India’s growing e-waste volumes and rising battery retirements become strategic assets. A credible recycling ecosystem could position India as a regional hub for reclaimed minerals while sparing land and water from intensive mining.
The challenge, however, lies in execution. Recycling rare earths and battery minerals demands sophisticated metallurgy, chemical separation, and strict environmental safeguards. Even advanced economies have struggled. The European Commission acknowledges that the EU has historically recycled less than 1 percent of lithium and under 40 percent of cobalt from spent batteries, prompting legally binding recovery targets under the new EU Batteries Regulation.
India starts from an even tougher baseline. It faces fragmented waste-collection systems and a large informal recycling sector. Without formalised collection and effective enforcement, valuable materials leak into unsafe informal channels, causing environmental harm while forfeiting strategic value. In this context, China’s experience suggests that the loop functions only when collection, processing, and downstream demand are aligned within a coherent regulatory framework. Without formalisation and traceability, recycling remains marginal.
Yet India also holds advantages. Its expanding EV, renewable-energy, and electronics markets ensure long-term demand for recovered inputs. Forecasts suggest that recycling could meet up to 30 percent of battery material demand in the coming years. As global prices rise and supply risks intensify, recycled materials are expected to become cost-competitive by 2026. Recycling is not a substitute for mining but a strategic bridge, buying time while domestic and overseas extraction capacity matures. This bridge is reinforced through partnerships such as India–Japan cooperation on e-waste, which deploys advanced collection and recycling systems to convert urban waste into critical metals.
China’s experience suggests that the loop functions only when collection, processing, and downstream demand are aligned within a coherent regulatory framework. Without formalisation and traceability, recycling remains marginal.
China’s mineral loop demonstrates that recycling can cushion geopolitical shocks even in a contested environment. India need not replicate China’s scale to benefit from its logic. By placing recycling at the forefront of its mineral strategy, India can shorten the path to partial autonomy, reduce environmental damage, and strengthen its bargaining position in a fragmented mineral order.
China’s export controls have exposed fragile global supply chains. They have also shown how closed-loop recycling can function as strategic infrastructure by absorbing shocks and preserving leverage. India’s recent policy moves suggest convergence on a similar insight, albeit from a different direction. If it can align collection systems, processing capacity, and downstream demand, India’s mineral loop need not mirror China’s governance model to deliver resilience. In a world where minerals shape both industrial power and geopolitical bargaining, recycling may become India’s first line of defence.
Manish Vaid is a Junior Fellow at the Observer Research Foundation.
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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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