Associated Minerals can bridge India’s Critical Mineral supply gap – ET Infra

In July this year, the world was surprised when China announced a restriction on export of gallium and germanium in an apparent retaliation against some Western superpower.

These two minerals are critical for manufacturing of semiconductors without which we cannot think of the modern world and the world is dependent on China for these minerals. And within two months, the US had to acknowledge its inability to cut China out of the critical minerals supply chain though the US seeks to diversify its sources. Such is the nature of critical minerals which has truly become strategic.

Critical minerals are broadly those minerals which are both economically important for a country and have high risk of supply disruption.

Lithium, cobalt, copper, nickel, rare earth elements etc. are some commonly known critical minerals. These minerals have applications in crucial areas like electronics, defence, telecommunication, pharmaceuticals etc. and the entire endeavour of clean energy transition to solar and wind power, energy storage and electric vehicles are dependent on these critical minerals. Their supply is not only low, but also highly concentrated in a few countries.

India has recently released a list of 30 critical minerals, in most of which we are completely import dependent. But fortunately, some of these critical minerals are available as the by-products of the refining of the major primary minerals like zinc, lead, copper or bauxite. For example, Antimony, Bismuth, Cadmium, Gallium, Germanium, Indium, Selenium etc. can be derived as valuable byproducts from refining or smelting the primary minerals like copper, zinc and lead.

The bauxite residue is also a good source of Titanium, Vanadium, Gallium and Rare earth Elements (REE). Even a considerable amount of gold and silver can be recovered from refining of lead-zinc and copper.

Such minerals are called Associated Minerals as they geologically occur together in inseparable form and hence necessarily be mined and processed together with the principal mineral.

Fortunately, India is already having abundant production of principal minerals like bauxite and zinc, and a little bit of copper – the primary minerals from which the associated critical minerals can be extracted.

But it is not necessary that the presence or extractability of the associated minerals can be discovered at the time when the mining lease deed is signed. It can be found over a period when that mineral containing area of the lease is explored and mined or when a company invests in the technology to extract those associated minerals while processing the primary minerals.

However, the Indian law is quite restrictive towards the associated minerals, particularly if the newly discovered mineral is not specified in the mining lease. For the mines which were granted prior to the auction regime, law does not give the miner any right over the discovered mineral, nor does it allow the sale of such mineral. Moreover, it allows the state government to acquire such minerals and pay just the cost of production of the mineral to the miner.

Then who will take the pain to invest in technology to recover the associated critical minerals from the primary mineral, if the entire value of that has to be handed over to the state government and mining company receives merely the cost of production in return? As a result, those valuable critical minerals may remain buried under the earth forever or wasted in the dumps or tailings.

Government will also lose large chunk of revenue from royalty and other taxes from these highly priced minerals.

Such restrictive regulation goes against the spirit of optimum and complete extraction of minerals to promote “zero-waste” mining as mentioned in the National Mineral Policy, 2019.

For auctioned mines, though it is allowed to mine and sell the subsequently discovered minerals after including them in the mining lease deed, but the miner must pay the same revenue sharing percentage with government for the newly discovered minerals, which he quoted for the primary mineral at the time of auction.

Now, consider iron ore, which is the primary mineral and manganese, titanium, vanadium etc. come as its associated minerals. The average bid premium for winning iron ore blocks so far has been 108% of the sale price which needs to be shared with the state government. If the same kind of revenue has to be shared with government if any manganese is found subsequently whose average bid premium has been around 46%, excluding some crazy bids, then mining of manganese or titanium or vanadium will become unfeasible as they occur in much less concentration in the ore than iron.

India hardly has any exploration and mining for critical minerals, but our demand is growing rapidly. It takes around five to seven years or even more to start a new mine after finding the mineral through exploration.

Hence, India should allow the miners to mine the associated minerals and get its full sale value for all types of mines to encourage augmenting supply of critical minerals. Government may charge an additional royalty on such minerals. The miner should be given an opportunity to include such minerals in the mining lease deed without any penalty if they missed it earlier.

While India playing a responsible role in energy transition and critical minerals supply chain. Reforming the regulations of associated minerals can bring the domestic supply to the downstream industries at the quickest possible way and thereby reducing our import dependence.

  • Published On Oct 5, 2023 at 11:06 AM IST

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