Approach:

Introduction: Define critical and strategic minerals. Explain why these minerals are essential to India's economy and national security.

Body: Highlight the provisions of the bill that relate to critical and strategic minerals. Analyse how the classification of these minerals will impact India's resource management

Conclusion: Make recommendations for how India can best manage its resources in the future

Answer:

Critical and strategic minerals are those that are essential for the economic development and national security of a country. The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, introduces a new category of minerals called critical minerals, which are defined as minerals having strategic importance for India and which may be notified by the central government from time to time.

These minerals are essential for India's economy and national security because they are used in various sectors such as clean energy, information and communication technology, advanced manufacturing, defence, and aerospace.

The provisions of the Mines and Minerals (Development and Regulation) Amendment Bill, 2023, that relate to critical and strategic minerals:

1. List of Critical and Strategic Minerals: The Bill designates six minerals, including lithium, beryllium, niobium, titanium, tantalum, and zirconium, as critical and strategic minerals. These minerals were previously classified as atomic minerals and were restricted to government-owned entities for exploration and mining.
2. Private Sector Participation: The Bill introduces a new type of licence called an exploration licence (EL), which aims to encourage private sector participation in mineral exploration. Private companies can bid for ELs through competitive auctions. These licences will be issued for a period of five years, extendable by two years, and will cover 29 minerals specified in the Seventh Schedule of the Act.
3. Reconnaissance Activities: The Bill allows certain activities, such as pitting, trenching, drilling, and sub-surface excavation, as part of reconnaissance-level exploration. These activities were previously prohibited.
4. Auctions: The Bill reserves the conduct of auctions for composite licences and mining leases for specified critical and strategic minerals for the central government. Companies that hold exploration licenses can receive a share of the premium paid by mining lease holders when a successfully explored mine is auctioned and operationalized.
5. Retention of Area: Exploration licence holders can retain up to 25% of the originally authorised exploration area after the first three years, subject to the submission of a report to the state government.

How this classification will impact India's resource management practises

1. Reduced Dependence on Imports: The classification of minerals as critical and strategic underscores their importance for India's economic growth and security. By allowing private sector participation in the exploration and mining of these minerals, the government aims to reduce import dependence. This can potentially lead to increased domestic production of these minerals, which, in turn, would enhance supply chain resilience and mitigate the risks associated with supply disruptions from foreign sources.
2. Diversification of Suppliers: Private sector participation can encourage diversified exploration and mining efforts. This diversification may lead to the discovery of new mineral deposits and reduce reliance on a few specific geographical locations for supply. As recent events like the Russian invasion of Ukraine have shown, supplier diversification is essential to reduce vulnerability to shocks or disruptions in global supply chains.
3. Attracting Investment: Allowing private sector participation in critical mineral exploration and mining can attract domestic and foreign investment. Private companies often bring technological expertise, innovation, and capital investment, which can accelerate exploration efforts and lead to more efficient and sustainable mining practises. This investment influx can contribute to India's efforts to secure its supply of critical minerals.
4. Strengthening Domestic Industry: By developing a domestic supply chain for critical minerals, India can support its domestic industries that rely on these minerals. For instance, the availability of domestically sourced lithium can bolster the production of lithium-ion batteries for electric vehicles, reducing dependence on imported batteries and related components.
5. Strategic Stockpiling: As part of its efforts to secure supply chains for critical minerals, India could consider strategic stockpiling. Stockpiles of essential minerals can act as a buffer during supply disruptions, ensuring a stable supply for essential industries. This approach is particularly relevant for minerals with limited global availability.
6. Long-Term Planning and Collaboration: The classification of minerals as critical and strategic underscores the need for long-term planning and collaboration among government, industry, and research institutions. Efforts should be made to encourage research and development initiatives focused on exploring alternative sources, recycling, and substitution of critical minerals.
7. Global Partnerships: India can explore partnerships with other countries that have expertise in critical mineral exploration and production. Collaborative efforts can lead to shared knowledge, technology transfer, and diversified supply sources, reducing the risks associated with relying solely on domestic production.

To effectively manage its mineral resources, India should encourage diverse exploration, invest in research and innovation, and promote sustainable mining practises. Strategic stockpiling, resource efficiency, international collaboration, and transparent governance can enhance resource security. Incentives for responsible mining, local community support, and long-term planning are essential. Public awareness about the importance of sustainable practices is crucial. These measures will reduce import reliance, ensure supply chain resilience, and contribute to economic growth and technological advancement.