India’s upcoming auction of valuable mineral blocks – a gamechanger for self-reliance?

India set to auction valuable mineral blocks

India is preparing for mineral block auctions, potentially including graphite, nickel, chromium, and molybdenum as per the latest news. Here is an UCN team’s comprehensive analysis of upcoming auctions impact on India’s economy, and the key concepts and insights involved.

Latest Update

  • Govt to invite bids for 20 critical mineral blocks including lithium and graphite in end of Nov, 2023.
  • Auction notice aims to boost domestic production of strategic minerals for EVs, tech manufacturing.
  • Last month, Centre approved royalty rates for lithium, niobium and rare earths.
  • Upcoming auction marks further progress in India’s push for self-reliance in critical minerals required for energy transition.

This follows sweeping amendments made to the Mines and Minerals (Development and Regulation) Act in July 2023, which primarily allowed for private investments in select critical minerals like lithium and others.

  • The amendments paved the way for the upcoming auction of valuable mineral blocks by allowing private sector participation.

The upcoming opportunities for auctioning critical mineral blocks are significant for India’s mining sector and could play a vital role in the nation’s industrial development.

  • India currently depends heavily on imports for many critical minerals. The auction of domestic mineral blocks will help boost local production and reduce import reliance.
  • It will also open up opportunities for private companies to enter critical mineral mining, boosting growth of the sector.
  • Securing domestic supplies of essential minerals like graphite, nickel, chromium will provide a fillip to manufacturing industries dependent on these raw materials.

Overview

Key Takeaways: India’s Mineral Block Auction
SectionsDetails
Why in NewsGovt. to auction graphite, nickel, chromium, molybdenum blocks
Follows sweeping policy reforms allowing pvt sector in critical mineral mining
Critical Minerals Crucial for India
  • Vital for EVs, electronics, defence equipment
  • India currently import-dependent
  • Govt identified 30 critical minerals including rare earths
Recent Policy Changes
  • Amendments to MMDR Act (July 2023)
  • Allows pvt sector participation in critical mineral mining
  • Central govt to conduct auctions, not states
Auctions to Commence Soon
  • 1st phase: Graphite, nickel, chromium, molybdenum
  • 100+ blocks identified across India
Significance of Auctions
  • Opportunity for pvt sector investment
  • Reduce import reliance; progress towards self-reliance
  • Boost industrial growth and align with energy transition
Way Forward
  • Ensure sustainable mining
  • Build downstream industries
  • Collaborate with other nations
Bottomline
  • Auctions mark a turning point for India’s critical mineral security
  • Will bolster Make in India, reduce vulnerability to supply disruptions
mineral blocks
mineral blocks

Background

Critical minerals

Critical minerals are elements that are vital building blocks for modern-day technologies and have strategic economic importance.

  • These include minerals like graphite, lithium, cobalt, nickel, rare earths that are essential for manufacturing electric vehicles, electronics, defense equipment, and other cutting-edge applications.
  • India is heavily dependent on imports to meet its critical mineral needs. It wants to boost domestic production to become self-reliant.
  • The government has released a list of 30 key minerals classified as ‘critical’ to focus its efforts on. This includes:
    • 17 rare earth elements like neodymium, dysprosium, yttrium
    • Other strategic minerals like lithium, cobalt, nickel, graphite
  • Rare earths are a group of 17 scarce metallic elements used in defense equipment, smartphones, batteries, and catalysts.
  • India imports most of its rare earth needs from China. Building domestic capacity can help reduce vulnerability to supply disruptions.

Expanding domestic critical mineral production will align with the Make in India and Aatmanirbhar Bharat initiatives by reducing import reliance.

The government has recently implemented significant policy changes aimed at enhancing domestic critical mineral production.
The government has recently implemented significant policy changes aimed at enhancing domestic critical mineral production.

Recent policy changes

Here’s a summary of recent government policy changes we’ve brought to you. The government has recently implemented significant policy changes aimed at enhancing domestic critical mineral production.

  • In July 2023, amendments were made to the Mines and Minerals (Development and Regulation) Act, 1957.
  • These amendments allow private sector participation in the mining of critical minerals like lithium, cobalt, nickel etc.
  • Earlier, only state-owned companies were allowed to mine these strategic minerals. Opening up to the private sector is a major reform.
  • The amendments also enable the central government to conduct auctions for leases of critical mineral mines.
  • Earlier, the auctions were conducted by state governments. Centralized auctions are expected to be more efficient.
  • The policy changes aim to:
    • Boost exploration and production of critical minerals
    • Reduce import reliance through domestic sourcing
    • Increase private investment in the mining sector
  • The reforms will facilitate the upcoming auction of valuable mineral blocks across India.
  • It will help align India’s mining sector with the nation’s strategic priorities to emerge as a leading manufacturing hub.

Details of upcoming auctions

Minerals identified

The government has identified the minerals that will be auctioned in the first phase:

  • The first few mineral blocks to go under the hammer will be:
    • Graphite
    • Nickel
    • Chromium
    • Molybdenum
  • Around 100 mineral blocks have been identified across various states in India for the upcoming auctions.
  • In later phases, other critical minerals will also be auctioned:
    • Lithium
    • Cobalt
    • Rare earths
    • Platinum group elements

Timeline

  • August 2023 – Preparations for the auction process began. Mineral blocks were identified across states.
  • December 2023 – Tender for seeking bids from companies is likely to be released.
  • March 2024 – The actual auction process may start, about 3 months after tendering.
  • The auctions will be conducted in a phased manner over the next few years for all identified mineral blocks.

Mineral Locations in India

  • Graphite deposits are located mainly in eastern states like Jharkhand, Odisha and Chhattisgarh.
  • Nickel and Chromium mineral blocks are primarily located in Odisha.
  • Molybdenum is found in Jharkhand, Khasi and Jaintia Hills- Meghalaya and also in Tamil Nadu.

Significance

The upcoming auctions are highly significant for the following reasons:

  • They will open up opportunities for private sector to invest in critical mineral mining. Earlier, the private sector was barred from this strategic segment.
  • Producing these minerals domestically will help reduce import reliance and make India self-sufficient.
  • It will provide a boost to industrial growth as key raw materials will be available domestically. Industries like steel, auto, electronics can benefit.
  • Domestic production of minerals like lithium, graphite and nickel will align with India’s energy transition goals as they are vital for EV manufacturing.

Final Thoughts

The UCN team has a strong sense that while augmenting domestic mineral production, India must also:

  • Ensure sustainable mining practices through proper rehabilitation and reclamation of mined areas. This will minimize environmental damage.
  • Build downstream industries using the mined minerals to maximize value addition within the country. For instance, make EV batteries from lithium rather than just exporting lithium ore.
  • Collaborate with resource-rich nations through joint ventures and strategic partnerships. This will help ensure mineral supply security in the long-run.
  • Invest in R&D to find new reserves, improve extraction and processing technologies.
  • Develop skilled manpower for the mining and mineral processing sectors.
  • Finally, a comprehensive strategy is required to leverage India’s mineral wealth while safeguarding sustainability.
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UCN Team
UCN Team

UCN Team: Combining expertise in UPSC Exams and Tech to deliver high-resolution, insightful content for aspiring civil servants

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