Opinion The strategic race India can’t lose
Critical minerals are the new oil. India must open up exploration to protect its interests
For the US, the present scenario around critical minerals is not dissimilar to the situation in oil three decades ago. (Source: File) A resolution of the Russia-Ukraine war seems imminent. The contours of the peace may depend on Volodymyr Zelenskyy’s final offer of American access to his country’s considerable critical mineral resources. Not long ago, America’s involvement in foreign wars or conflicts centred around the geoeconomics of oil. The technologies of the “future” — electric vehicles, renewable energy, high-tech semiconductors, etc — all are critical-mineral-intensive. Critical minerals — copper, lithium, cobalt, graphite, nickel, rare earths among others — are the new oil with great influence on not just economics but over war and peace. India must take note.
In the second half of the 20th century, America’s involvement in foreign conflicts and wars was influenced partly by ideology, but also by geoeconomic interests, particularly oil. Think back to the first Gulf War. At that time, the US was import-dependent for oil. Since then, the US left no stone unturned to become self-sufficient in oil and gas, becoming the largest producer in the world. Import dependence on something as fundamental as oil is a strategic vulnerability.
The reason why Vladimir Putin’s Russia can fight protracted wars despite a middling economy is its self-sufficiency in oil and gas and defence equipment. But without the former, having the latter would not be enough. Abundant, affordable fuel is necessary to run the war machinery. Putin also knows that Europe’s import dependence on energy, particularly gas, is what makes its response to Russia’s moves more complicated.
For the US, the present scenario around critical minerals is not dissimilar to the situation in oil three decades ago. It may be more acute. The US is heavily import-dependent. Worse, the greatest concentration of many critical minerals, particularly rare earths, is in the hands of its greatest rival, China. Imagine the Cold War if the USSR had control over much of the world’s oil.
President Donald Trump’s interest in “acquiring” Greenland or suggestion to make Canada the 51st state of the US is driven by the huge potential these lands have in critical minerals. Ukraine is also well endowed. It has one-third of the estimated lithium reserves in all of Europe. Its reserves of graphite, a key input in batteries, are among the top 5 in the world. It has significant reserves of 17 rare earths in which China controls about 75 per cent of global deposits. And in recent months, it has not hesitated to ban or restrict exports.
The US is locked in a tight race with China on the technological frontier. Overall, one would assume that the US is ahead, but China’s dominance of the global electric vehicle industry (the US only has Tesla in the top league of EVs), its catch-up in AI with Deepseek, its ability to manufacture cutting-edge military hardware including sixth-generation fighter jets, suggests that US leadership isn’t as certain or secure as it may have been a decade ago.
The last thing the US would want in such a scenario is to be vulnerable in the supply chain for raw materials which underlie many of these technologies. For now, the US may not achieve self-sufficiency, but it will want to ensure zero dependence on China or any other country that is not friendly to US interests. Therefore, Ukraine’s resources are important. And the war gives the US more leverage with Ukraine than it has with Greenland or Canada.
There are lessons for India. India may not be in the same league as the US and China in terms of technology and cutting-edge manufacturing. It may not even feel the pressure on critical minerals because a lot of things including batteries and components of solar and wind power infrastructure are imported today. But the government aspires to make India a manufacturing hub and all of these should be made in India soon.
India’s import dependence for critical minerals is even more than for oil. The government is actively searching for assets overseas and signing supply agreements with friendly countries. However, there is no substitute for producing more domestically. India has a very rich geology but there is insufficient exploration. It is time to completely liberalise exploration and let those who make discoveries monetise their find. That is the global practice. That is the path to a vulnerability-free future.
The writer is Chief Economist, Vedanta Ltd
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