Interviewee: Amit Bhandari
Energy Review, Vol 5. Issue 01. 2023
Energy Review: Can you explain the importance of critical minerals in the transition to clean energy and climate mitigation efforts of India? Mr. Bhandari: India has a very ambitious renewable energy program with a target of 450 GW of installed renewable energy capacity by 2030. Likewise, there are over 1.3 million electric vehicles plying on Indian roads, with policies in place to encourage more consumers to shift. However, both of these face challenges. Renewable energy technologies such as solar and wind energy are intermittent and cannot work without backup, which may come from batteries. Batteries require minerals such as lithium, cobalt and nickel. Electric vehicles will require massive amounts of battery metals as well as rare earth for high-power magnets. Windmills also require high-power rare earth magnets. Without adequate quantities of these critical minerals at an affordable price, any large-scale energy transition will not be possible. ER: How does India's current dependency on foreign sources of critical minerals impact the country's ability to implement clean energy technologies? Mr. Bhandari: India doesn’t have significant reserves of minerals such as lithium and cobalt. It does have rare earth reserves, but not the elements used for making high-value magnets. New and large-scale mining operations are difficult in India due to issues of land acquisition. Moreover, rare earth reserves in India are controlled by the Department of Atomic Energy. Because of these reasons, I feel that India will not have a significant domestic production of critical minerals and will remain dependent on imports. Since many of the other large economies such as the US, EU, China and Japan are also in the market for the same commodities, secured supplies at a stable price are not guaranteed. Also, the supply chains for practically all of these minerals are highly concentrated – a disruption is a question of when, not if. ER: Can you discuss the potential environmental and social impacts of mining and processing critical minerals? Mr. Bhandari:I will focus on two minerals – rare earths and cobalt. Rare earth mining and production can be very polluting, which is why almost all of the mines in the Western world shut down in the early 2000s and production moved to China, which at one time accounted for over 90% of the global production. In the case of cobalt, about two-thirds of the global production comes from the Democratic Republic of Congo, which faces serious human rights issues. A clean industry cannot be built on such foundations. ER: How are countries and companies globally working to address the issue of overseas dependency on critical minerals? The Indian government has set up a company – Khanji Bidesh India Limited (KABIL), to invest in lithium assets overseas. However, this is an entity without any experience of operating mining assets, or carrying out operations in different geographies. So far, KABIL has had little success in acquiring any meaningful assets. At a global level, China already controls a large part of the global critical mineral supply via state-owned enterprises. These are important for China’s strategic vision to dominate industries such as electric mobility and renewable energy. Major economies such as the US, Japan and Australia have come out with critical mineral strategies in the recent past, all of these aims at ensuring adequate supplies at an affordable price, without a single country controlling the supply chain. ER: What steps can be taken to ensure a sustainable and responsible supply chain for critical minerals in the clean energy industry? Mr. Bhandari: The mining of critical minerals and their processing must be spread across multiple geographies. This will require some international collaboration, as well as policy measures from governments. For instance, large companies operating in businesses such as renewable energy or electric vehicles must also invest in creating capacity and supply chains for the raw materials. Concerted action will be needed to avoid a single company or a group of companies with the same owner monopolizing global assets. Unless these conditions are met, any large-scale shift to technologies depending on these minerals will be ill-advised. (Mr. Amit Bhandari is a Senior Fellow at the Energy, Investment and Connectivity Division, Gateway House, Mumbai, India. He has nearly two decades of experience as a public policy researcher, an entrepreneur and a financial analyst.) ■□■