India Now Part Of US-Led Initiative To Counter China's Dominance In Critical Minerals— All About It

India has officially joined the Minerals Security Finance Network (MSFN), a new initiative spearheaded by the United States to bolster collaboration on securing critical mineral supply chains.

The announcement, made by the US State Department on the margins of the United Nations General Assembly on 23 September, involved a pact entered by 14 countries and the European Union.

The Minerals Security Finance Network (MSFN) is a new initiative that originates from the Minerals Security Partnership (MSP), a framework established by the US in 2022.

India became a member of the MSP in June 2023.

The establishment of the MSFN as an extension of the MSP comes amidst a growing dependence on nations like China for critical resources, particularly rare earth minerals.

Under this new partnership, the signatory countries emphasised that the scope and scale of meeting the rapidly increasing global demand for critical minerals to achieve the clean energy transition is beyond "the purview of any single institution" and that the investment to deliver these goals will require the public sector and private sector to work together to deploy capital into new and existing markets in this sector. 

The MSFN brings development finance institutions (DFIs) and export credit agencies (ECAs) from member nations together to "create synergies, and increase impact”.

“The participating DFIs and ECAs discussed, including with representatives from the private sector, how they can work together to meet this challenge,” the Joint Statement on Establishment of the Minerals Security Partnership Finance Network said.

“The energy transition is at risk. We need more production capacity for critical minerals that need to come online – many of these supply chains are concentrated in one or two countries and lack resilience,” US Undersecretary of State Jose W Fernandez said during the United Nations General Assembly in New York, Indian Express reported.

Earlier in June 2023, India joined the US-led MSP, a coalition of 14 countries that seeks to drive public and private investments in critical mineral supply chains worldwide.

In a joint statement on 23 June 2023, India and the US reiterated their commitment to work together to ensure their markets are well-supplied with the essential critical minerals, and pledged “to hasten bilateral collaboration to secure resilient critical minerals supply chains”, welcomed India into the grouping.

India’s entry into the MSP holds particular importance, as one of New Delhi’s central growth strategies involves a major shift towards electric vehicles in both public and private transportation sectors.

India's inclusion in the MSP in 2023 followed a concerted diplomatic effort by New Delhi, amid concerns within the Indian government over its initial exclusion from the strategic initiative aimed at reducing dependence on China for critical minerals.

These concerns were amplified when the partnership, which was launched in mid-2022, was expanded to include Italy in early 2023.

The MSP is said to have considered collaboration on around 150 projects, eventually shortlisting a dozen, including creating a critical minerals and metals cooperation forum for sharing of expertise, developing battery materials, and jointly developing a minerals processing facility in South America.

The MSP grouping is reportedly focused on the supply chains of minerals such as cobalt, nickel, lithium and also the 17 “rare earth” minerals.

Cobalt, nickel, and lithium are essential for electric vehicle batteries, while rare earth minerals, in trace amounts, are crucial for semiconductors and advanced electronics.

China is a strong player in this space and has created processing infrastructure in rare earth minerals and has acquired mines in Africa for sourcing elements such as cobalt.

Rare earth elements consist of 17 elements, divided into two categories: light rare earth elements (LREE) and heavy rare earth elements (HREE).

India has reserves of some rare earth elements like lanthanum, cerium, neodymium, praseodymium, and samarium.

However, heavy rare earth elements such as dysprosium, terbium, and europium are not found in extractable quantities in Indian deposits.

At present, there is a heavy reliance on China for heavy rare earth elements, as it produces around 70 per cent of the global supply.

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