India's critical mineral exploration: What is the way forward?

India needs to target at least $2 billion in critical mineral exploration investment annually. This would mean an investment that will have to be 50x to 100x times the present exploration spending, Biplob Chatterjee, CEO and Director (Consulting), Geovale Services, said while speaking at the CII-organised India Mining Summit, held in New Delhi recently.

As the exploration would start from the conceptual targeting phase and will not be brownfield, it will take longer - an average of 10 years from concept to mine development, if it progresses without any hindrances, he indicated.

The likely duration of transition from exploration to a mine will possibly take 10-20 years. The global success rate of converting exploration to mine is 1:100 to 1:1000.

Currently, the largest mineral explorer in India is the Geological Survey of India (GSI). Its exploration in critical mineral projects has increased from 59 in 2020-21 to 122 in 2023-24. In the last four years, GSI has taken up 400 projects covering an area of about 15,000 sq km..

For almost every critical mineral, India is either importing or importing the products. Product development from critical minerals is highly immature at present and will take a few decades to reach an acceptable maturity level.

What is driving critical mineral exploration?

The massive demand for critical minerals is being driven by the clean energy transition drive, informed Gouranga Sen, Group Head, Economic & Policy Analysis, Vedanta. This growth is likely to continue at least for the next 50 years, supported by governmental policy support globally.

But the challenge is whether supply of critical minerals can match the growing demand, he observed. Secondly whether the supply can come from diversified sources. Thirdly, whether the minerals will have clean and sustainable sources. "If we need to meet our net zero targets, supply is not going to come to meet demand. As per IEA, there will be around 50% gap between demand and supply," he said.

Within the supply scenario, in the existing resources, higher grades are depleting, newer capacities are coming at a substantially high cost of production, raising prices of end-user products like batteries, wind and solar power. Thirdly, there are community challenges.

Dominance of a few countries

The top three countries hold more than 75% of the supply across minerals and that too concentrated within China. For instance, China controls 70% of vanadium supply, 65% of graphite and 38% of titanium. Half of the world's nickel is being sourced from Indonesia which is slapping restrictions almost every year on exports.

In processing, 90% of the same of all rare earth minerals is concentrated in China. And till 2023-30, countries like China, Canada and Indonesia will dominate the processing aspects of critical minerals - posing a huge risk for a consuming country like India.

To diversify sourcing, India can tap into projects in east Africa and CIS, remarked Hanuma Prasad, Managing Director, Deccan Gold Mines.

India has a likely obvious geological potential (OGP) for critical minerals of about 2 million sq km. But spends a mere $17/ sq km on critical mineral exploration whereas Canada and Australia spend more than $300/sq km and on much larger exploration areas.

Suggestions from industry

1) Conduct a Single Stage Auction on a National Critical Mineral Exploration Auction Platform for all the "Open" areas.

Bidding should be on three parameters with appropriate weightage:

i) "Minimum exploration expenditure commitment" per sq km per year over the government-declared minimum exploration expenditure per sq km per year.

ii) Originator incentive.

iii) Profit sharing, if a discovered deposit is brought to mine.

2) Declare the entire OGP area in the country as open for exploration application.

3) Declare the entire OGP area into 5km x 5km with no restriction on the number of blocks to acquire.

4) Declare a "Minimum Exploration Expenditure Requirement" per sq km per year for the area retained as exploration licence.

5) Provide all the baseline information acquired earlier (by the government and submitted to the government during relinquishment of the area through the National Geoscience Data Repository (NGDR)portal to everyone.

6) Conduct recurring auction of all the "Open" areas in the country, twice a year, say, over 1 January-31 June and 1 July-31 December. And open the auctions to applications for 31 days starting 1 January and 1 July, and process the applications and execute the same in the next five months.