India has upped the ante in its critical minerals play, with Finance Minister Nirmala Sitharaman announcing full exemption of customs duty on 25 critical minerals, including lithium, cobalt, and rare earths, among others. The first-ever offshore mineral block auctions will also be undertaken.
Duty rates for several critical minerals like graphite, silicon quartz and silicon dioxide have also been slashed from 5-7.5 per cent to 2.5 per cent.
Critical minerals, the lynchpin of renewable energy and clean technologies, remain an elusive resource in India’s transition to a low-carbon future.
Augmenting availability
Besides lithium and cobalt, antimony, beryllium, bismuth, gallium, germanium, hafnium, indium, molybdenum, niobium, nickel, potash, rhenium, strontium, tantalum, tellurium, tin, tungsten, vanadium, zirconium, selenium, cadmium and silicon (other than quartz and silicon dioxide) will attract zero custom duty.
This is expected to augment the availability of critical minerals by providing a fillip to the processing and refining sector.
Sitharaman said minerals such as lithium, copper, cobalt and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.
“I propose to fully exempt customs duties on 25 critical minerals and reduce BCD [basic custom duty] on two of them. This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors,” she said.
Risabh Jain, Senior Programme Lead, CEEW, said the sustainability-focused organisation’s 2023 report had highlighted the vulnerabilities and opportunities in the global critical minerals supply chain. “Indigenising and overseas acquisition of mining and building domestic capabilities (for process and recycle) will secure the supply chain for the domestic manufacturing ecosystem, especially for clean energy sectors such as solar, wind, EV and batteries,” he said.
Import dependency
India continues to rely on import of critical minerals, especially lithium, cobalt, and titanium, among others.
The import bill for lithium ion — used in EV battery-making and energy storage solutions — is expected to be nearly ₹30,000 crore, with China as a major source country.
A response to a query in Parliament in August 2023 had mentioned that the import of four critical minerals — lithium (apart from lithium ion), cobalt, nickel and copper — cost around ₹34,800 crore in FY23, and the reliance on these minerals was 93-100 per cent.
India has been seeking overseas supply arrangements, including acquiring lithium mines in Argentina, exploring lithium mines in Australia and Chile, copper and cobalt sourcing from African nations, graphite sources in Sri Lanka.
Sitharaman has announced setting up a ‘critical mineral mission’ to push domestic production and overseas acquisitions, including exploring various financing mechanisms.
“We will set up a ‘critical mineral mission’ for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism,” she said.
According to Nitin Gupta, Co-Founder and CEO, Attero — India’s largest lithium-ion battery recycler, the waiving of customs duty “provides a major fillip to the processing and refining sectors”.
“These measures (critical mineral mission and custom duty waiver) will significantly boost processing and recycling industries, enabling India to become the recycling and critical minerals hub globally,” he said.
Offshore mineral block auction
Also on the cards is the first ever offshore mineral block auction “for mining, building on the exploration already carried out”, the Finance Minister said in her Budget speech.
Sources in the Mines Ministry said that 10 blocks have been shortlisted for auction and inter-ministerial consultations are on. The typical minerals would include construction sand, lime mud, and polymetallic nodules, among others.
The ministry has identified some blocks in an exclusive economic zone of India, namely beyond territorial waters (12 nautical miles), for lime mud and polymetallic nodules.