As the worldwide effort to de-risk the rare earths dependence on China gains momentum, India signed two critical mineral framework agreements with the US during Marco Rubio’s visit to India.
One is a bilateral India-US Framework on “Securing of Supply in the Mining and Processing of Critical Minerals and Rare Earths” and the other is a multilateral Quad Critical Minerals Initiative Framework.
Shobhankita Reddy, a Research Analyst in High Tech Geopolitics at the Takshashila Institute, told StratNewsGlobal on The Gist that the timing of the agreements is important. It shows there is a “genuine appetite” to de-risk from China. But she underscored that it’s also about “signalling” intent.
The problem for the US is the hollowing out of its manufacturing capacity, with much of it moving to China.
“From the US perspective, this (manufacturing) is a tool that China continuously seems to use that actually leaves them vulnerable.”
India is neither a producer of critical mineral nor a processor, but it is a huge market and a key “technology node” for the US.
“Although India is a late entrant to the Critical Minerals Partnership or Pax Silica, these kinds of frameworks and announcements only cement that India is a valuable technology node and cannot be ignored,” Reddy said.
India, too, remains an under-explored market for rare earths. Reddy states that very little is being done at this point in time in terms of actual technology transfer, actual mineral flows being assured. “But we also have to be cognizant that it takes time for these things to be set up.”
The QUAD framework, she says, is essential to raise money. “Exploration is a very expensive process. It takes a long time from discovery to actual production. So we need capital subsidy, we need government support, especially given that China can artificially suppress prices for a long period of time.”
Another gap she says is in the US stockpiling initiative for manufacturers called the Project World, a $12 billion initiative between private sector and public sector. While in theory it aims to create a stockpile of essential minerals, the process is inefficient given that many producers may not know the downstream requirements of certain critical minerals.
“There’s also some issue with economic reasoning because $12 billion is not enough money if you want to stockpile sufficient quantities of major minerals.” She suggests increasing the stockpile to a consortium or bloc level rather than being focussed on one country and a few private players.
Watch the whole conversation on the Gist here.
