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Minerals Security Partnership Finance Network

Posted 17 Oct 2024

Updated 22 Oct 2024

4 min read

Why in the News?

Recently, India joined the US-led Minerals Security Partnership (MSP) Finance Network to secure sustainable supply chains for critical minerals.

More on the News

  • India’s participation in MSP Finance Network is part of its broader effort to diversify and secure its supply of critical minerals.
  • It also aims to reduce dependency on China, which currently dominates global critical mineral supply chains.

What is MSP Finance Network?

About Mineral Security Partnership 

  • Genesis: Launched in 2022.
  • Objective: To facilitate public and private sector investments in strategic critical minerals projects to help build more secure, diverse, and sustainable critical mineral supply chains. 
  • Members: It includes 14 countries and the European Union, which collectively account for over 50% of Global GDP
    • India joined in 2023.
  • Investments by MSP are not limited to projects in MSP partner countries
  • An initiative of the Minerals Security Partnership, it is joint financing body designed to fund critical minerals projects across the globe.
  • Objectives: To unite institutions from the Indo-Pacific region and Europe to strengthen cooperation, promote information exchange and co-financing among participating institutions, with the aim of advancing diverse, secure, and sustainable supply chains for critical minerals.
    • It will also drive sustainable investmentin global critical mineral supply chains, including by mobilizing private sector capital, in production, extraction, processing, recycling, and recovery projects.
  • Members: 14 countries including India and the European Commission. 
    • It also includes the US International Development Finance Corporation (DFC), European Investment Bank (EIB), Japan International Cooperation Agency (JICA), among others.

What are Critical Minerals?

  • These minerals are building blocks of essential modern-day technologies and are at risk of supply chain disruptions due to limited global production and geopolitical factors.
    • e.g., Lithium, cobalt, nickel, copper, rare earth elements, etc.
  • Government of India has released a list of 30 critical minerals for India. 
    • These minerals are - Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium, and Cadmium.
An infographic image outlining the significance of critical minerals in three key areas - Economic: Used in industries like telecommunications, electric vehicles, and electronics manufacturing; Environmental: Crucial for renewable energy technologies such as solar panels, wind turbines, and semiconductors; Security: Important for defense manufacturing, including precision-guided missiles and aircraft technologies.

What are the challenges in securing Critical Minerals for India? 

  • Limited domestic reserves: India lacks significant deposits of many critical minerals within its territory necessitating heavy reliance on imports and exposing to supply chain vulnerabilities.
    • Low private investment, limited technological expertise, and evolving regulations further hinder domestic production of critical minerals.
  • Geopolitical complexities: e.g., Democratic Republic of Congo supplies ~70% of the world's cobalt, but political instability there has led to supply disruptions affecting industries relying on cobalt for batteries and alloys.
  • Global competition and supply chain vulnerabilities: e.g., China controls ~85% of global rare earth element processing capacity and ~60% of critical minerals production, resulting in a virtual monopoly over critical minerals for high-tech manufacturing.
  • Environmental Concerns: Mining and processing of critical minerals often have significant environmental footprint resulting in protests from local population and environmental groups.
  • Inadequate recycling infrastructure: Recycling of critical minerals from e-waste and spent technologies is underdeveloped, with the sector remaining largely unorganized and inefficient.
An infographic image outlining five key initiatives to secure critical minerals - The Mines and Minerals Amendment Act of 2023, allowing mining concessions for 24 critical minerals; Khanij Bidesh India Ltd. (KABIL), tasked with identifying and acquiring overseas mineral assets; Recycling and urban mining efforts through E-Waste Management Rules of 2022; International partnerships, including the Quad Critical and Emerging Technology Working Group; and the "Samudrayaan" project, aimed at exploring the Indian Ocean seabed for critical minerals.

Way Forward 

  • Establish a National Institute/Centre of Excellence on Critical Minerals: Set up a Centre of Excellence for Critical Minerals (CECM) under the Ministry of Mines to focus on critical mineral research, discovery, and innovation, modeled after Australia's CSIRO.
  • Boost domestic processing capabilities: Establish Special Economic Zones (SEZs) focused on critical mineral processing and value addition.
    • Implement a "Green Channel" for quick approvals of critical mineral projects, with stringent but efficient environmental and social impact assessments, etc.
An infographic image defining the term "Urban Mining." It explains that urban mining involves extracting valuable materials from waste that would otherwise end up in landfills or be incinerated. The definition notes that this process can recover both common materials like metals and plastics, as well as rarer, more valuable elements.
  • Promote Circular Economy in critical mineral recovery: Setting up state-of-the-art e-waste recycling facilities in urban centres, introducing a nationwide "Recycle for Resources" campaign to increase public awareness and participation in e-waste recycling, urban mining, etc.
  • Public-Private Partnerships: Establish joint ventures with global Original Equipment Manufacturers (OEMs) and mining companies to build resilient value chains and achieve India’s green energy goals.
  • Tags :
  • Critical Minerals
  • Mineral Security Partnership
  • MSP Finance Network
  • Urban Mining
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