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.

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 a 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.

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.

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.

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.

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.