Washington: With an eye on reducing dependence on China, India and the US signed a memorandum of understanding (MOU) to expand and diversify the critical minerals supply chain at a bilateral commercial dialogue in Washington DC on Thursday.
Commerce and industry minister Piyush Goyal and US secretary of commerce Gina Raimondo signed the MOU that Goyal hailed as the “highlight” of the dialogue. Both sides also discussed semiconductor supply chains, collaboration in and with third countries, incentivising innovation including in clean energy, and promoting tourism, among other issues.
A US commerce department release said the MOU was aimed at “leveraging” the complementary strength of both countries to ensure greater resilience in the critical minerals sector. “Priority areas of focus include identifying equipment, services, policies, and best practices to facilitate the mutually beneficial commercial development of U.S. and Indian critical minerals exploration, extraction, processing and refining, recycling, and recovery,” the US release said. The Indian side seeS the MOU as opening the doors for further research and development, access to advanced processing technologies in the sector, and eventually a bilateral agreement focused on critical minerals.
In a recent paper for the Centre for Social and Economic Progress (CSEP), researcher Anindita Sinh noted, “Recognising Chinese dominance in mining and processing of many of these critical minerals, specifically Rare Earth Elements (REEs), graphite, manganese and others, has been one of the driving forces for countries to diversify supply chains. It presently accounts for approximately 60% of production and 85% of processing capacity of critical minerals globally.” Couple this with the fact that there is a concentration of critical mineral availability in select pockets in Australia, Africa and Latin America, and that the need for critical minerals will only expand — for instance, the International Energy Agency projects the demand for lithium will increase by over 40 times by 2040 if climate goals are to met.
{{/usCountry}}In a recent paper for the Centre for Social and Economic Progress (CSEP), researcher Anindita Sinh noted, “Recognising Chinese dominance in mining and processing of many of these critical minerals, specifically Rare Earth Elements (REEs), graphite, manganese and others, has been one of the driving forces for countries to diversify supply chains. It presently accounts for approximately 60% of production and 85% of processing capacity of critical minerals globally.” Couple this with the fact that there is a concentration of critical mineral availability in select pockets in Australia, Africa and Latin America, and that the need for critical minerals will only expand — for instance, the International Energy Agency projects the demand for lithium will increase by over 40 times by 2040 if climate goals are to met.
{{/usCountry}}All of this has spurred in India, first an internal policy reset and greater international engagement. In June 2023, India identified a set of 30 critical minerals for its national priorities. The official ministry of mines report said, “Critical minerals are the foundation upon which modern technology is built..Simply put, there is no energy transition without critical minerals, which is why their supply chain resilience has become an increasing priority for major economies. India’s future economic prosperity will depend on how well we can use our vast energy and mineral resources to play to our strengths, and how well we can adapt to follow the global market shift towards zero emissions”. India has also joined the Minerals Security Partnership, a US-led plurilateral effort of 14 countries and the EU.
At a media briefing, Goyal also said that the sixth commercial dialogue, along with the CEO forum and the regular meetings of the Trade Policy Forum, was a sign that bilateral institutional mechanisms were working well and the India-US relationship had transcended politics. He said, “The strategic discussions, including the critical minerals MOU, centered around resilient semiconductor supply chains, sustainability and clean energy in a big way. There was a lot of discussion to work with each other in newer areas such as tourism. The innovation handshake we had announced about a year ago has now been taken forward with technology and a sustainability summit expected next year.”
Goyal said that India and the US were also talking about working in third countries or with third countries and expanding the engagement beyond the bilateral. “For instance, whether we could look at critical minerals in third countries to be jointly worked upon, or investments from third countries for joint projects in India and US,” Goyal said offering examples of what this would mean in practice.
The US release also said that Goyal and Raimondo had reviewed and praised the work on semiconductor supply chains, and pledged to work together to facilitate collaboration between India and US companies to “towards mutually beneficial business opportunities, such as investments, joint ventures, and technology partnerships; and to promote talent and workforce development to benefit both countries”. They welcomed the efforts to bring towards the startup ecosystems of both countries closer through the innovation handshake.
They reviewed, according to the US release, the work on the strategic trade dialogue, a mechanism that has been set up to identify impediments around export controls to facilitate tech and defence cooperation. And for the future, besides critical minerals, the US release said that Goyal and Raimondo had launched a new effort, Indus Innovation, to focus on innovation in energy security, tech and sustainability. The US commerce department also intends to expand its presence in India to a total of 70 commercial service staff across seven cities.