Critical minerals have moved from the margins of resource policy to the centre of industrial strategy and security. Lithium, cobalt, nickel, graphite, copper and rare earth elements are foundational to electric vehicles, storage, renewable power, semiconductors, defence and advanced manufacturing. As decarbonisation and digitalisation accelerate, mineral security is becoming as important as oil once was. The global supply picture is concentrated. For copper, lithium, nickel, cobalt, graphite and rare earth elements, the average market share of the top three refining countries rose to 86% in 2024, from around 82% in 2020. Incremental supply is tied to a few nodes: Indonesia for nickel, and China for cobalt, graphite and rare earths. China is the leading refiner in 19 out of 20 strategic minerals with an average market share of about 70%, making minerals geopolitical, not merely commercial.

Geopolitical risk as a factor

Clean energy transitions will require minerals far beyond today’s production systems. The current copper project pipeline points to a potential 30% supply shortfall by 2035. Lithium appears better supplied in the near term but rising demand is expected to drive the market into deficit by the 2030s. Rare earth demand will rise sharply as wind power, electronics and magnets expand.

Geopolitical risk is compounding these pressures. China’s rare earth export controls announced in 2025 created concerns across energy, automotive, defence, aerospace, Artificial Intelligence (AI) and semiconductors. Major economies are responding quickly. The European Union (EU) Critical Raw Materials Act sets 2030 benchmarks of 10% domestic extraction, 40% processing and 25% recycling, and no more than 65% from a single country. The United States is diversifying supply chains through partnerships.

India’s clean energy and manufacturing ambitions are mineral intensive. Under a net zero scenario, cumulative demand for critical energy transition minerals could reach roughly 169 million tonnes by 2070, about 51% higher than under a current policy pathway. Copper demand will rise with power systems; rare earth demand will grow with wind energy and advanced manufacturing.

India has domestic potential, including reserves of cobalt (44.9 million tonnes), copper (163.9 million tonnes), graphite (211.6 million tonnes) and nickel (189 million tonnes), along with monazite deposits containing rare earth oxides. Recycling could eventually meet up to a quarter of copper and graphite demand by mid-century. Yet, reserves have not ensured supply security. India remains import dependent for lithium, cobalt and nickel, while graphite and China-dominated processing expose it to disruption as demand scales. The critical gap is processing and refining. India’s position differs from the EU, the U.S. and Australia, which are building integrated supply chains through mandates, partnerships and processing investments. India is still developing foundational capability. While several minerals are processed domestically, capacity and high-purity production remain constrained. It has bulk-mineral experience but still relies on imports for high-purity critical mineral products.

This is where much value and vulnerability sit. In 2024, China accounted for over 90% of rare earths and graphite processing, nearly 75% of cobalt and 70% of lithium chemicals. India must build midstream capacity to participate meaningfully in supply chain realignment.

Structural constraints

Several constraints slow progress. Exploration remains relatively shallow, regulatory clearances can be time-consuming, private participation is limited and remote-region project economics are challenging. Processing is a larger bottleneck: India lacks some high-purity input facilities, while copper and graphite face smelting, purification and scale constraints. Recycling will play a role but cannot substitute for primary supply in the near term because feedstock, collection and technology remain limited.

India’s policy response since 2023 marks a shift. The government has identified 30 critical minerals, strengthened regulatory frameworks, and launched the National Critical Mineral Mission to support the value chain. The mission targets 1,200 domestic exploration projects by 2030-31, production of at least 15 critical minerals, and acquisition of 50 overseas mining assets by Indian companies. The Khanij Bidesh India Limited (KABIL) has secured 15,703 hectares in Argentina’s Catamarca province for lithium exploration, while the 2026-27 Budget proposed rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. The India-U.S. critical minerals and rare earths framework signed in May 2026 provides an additional diplomatic lever.

Mission to execution

The next phase is execution. Processing and refining must become a national industrial priority, backed by infrastructure and targeted incentives. Private capital needs better geological data, predictable approvals and risk sharing. India should also operationalise strategic stockpiles for critical minerals, accelerate applied research and development through industry partnerships, scale domestic capabilities and diversify overseas supply through trusted partners and platforms.

India energy transition, electronics, semiconductor, defence manufacturing, and advanced industrialisation all depend on secure mineral supplies. While individual policy measures are necessary, they are insufficient. A comprehensive strategy should establish mineral-specific risk thresholds, integrate recycling into supply planning, set measurable milestones, and create a coordinated institutional framework. The priority now is to convert potential into capability and reduce strategic vulnerability through sustained execution.

Vinayak Vipul is Partner, Business Consulting, EY-Parthenon India

Published - August 04, 2026 12:08 am IST