Critical Mineral Supply Chains: Trilateral Perspectives from Japan, India and France

Backdrop

The countries of the Indo-Pacific region have prioritised climate action through their respective net-zero emissions programmes, which require installing low-carbon technologies fuelled by the availability of critical minerals. The extraction and processing of critical minerals are concentrated in a few countries, with China being a major player. The Indo-Pacific countries should use their domestic capacities optimally and participate in global supply chains with a diverse range of partner countries in mining, processing, assembling, and final-use activities. India is currently discussing trilateral cooperation with France and Japan.

The Indo-Pacific countries should use their domestic capacities optimally and participate in global supply chains with a diverse range of partner countries in mining, processing, assembling, and final-use activities. India is currently discussing trilateral cooperation with France and Japan.

Trilateral Cooperation

India has signed 12 trilateral agreements, starting with China and Russia in the 1990s and India-Brazil-South Africa in 2003. The more recent ones include India-France-Australia (2020), India-Japan-Italy (2021), India-Iran-Armenia (2023) and India-France-UAE (2023). The trilateral initiative with France and the United Arab Emirates (UAE) will focus on cooperation projects in solar and nuclear energy, hence the need for critical minerals. India has focused more attention on the Indo-Pacific region since 2011. Australia is included in three trilateral agreements, the United States (US) and France in two and Indonesia and the UAE in one each ( Malhotra & Fournol, 2023).

France started signing trilateral agreements in the 1990s. The FRANZ agreement with Australia and New Zealand was signed in 1992, which aimed at providing aid to the Pacific Island nations during natural disasters. In a recently signed India-France-Australia trilateral, the three countries “committed to advancing their shared values and working together to achieve a free, open, inclusive and rules-based Indo-Pacific”. The centrality of ASEAN has been highlighted, as has the ASEAN’s Outlook on the Indo-Pacific (Ministry for Europe and Foreign Affairs, 2021).

Japan has also entered multiple trilateral cooperation agreements. Apart from agreements including India, Japan initiated trilateral cooperation with Europe and the US in 2018 and with South Korea and the US as an Indo-Pacific dialogue in 2023 (USTR, 2020) (U.S. Department of State, 2024).

France, India, and Japan can collaborate trilaterally and work with the Mineral Security Partnership (MSP), the Quadrilateral Security Dialogue (Quad), the Indo-Pacific Economic Framework for Prosperity (IPEF), the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) to ensure sustainable growth in the Indo-Pacific region, particularly with regards to ensuring the resilient supply chains of critical minerals.

France, India, and Japan can collaborate trilaterally and work with the Mineral Security Partnership (MSP), the Quadrilateral Security Dialogue (Quad), the Indo-Pacific Economic Framework for Prosperity (IPEF), the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) to ensure sustainable growth in the Indo-Pacific region, particularly with regards to ensuring the resilient supply chains of critical minerals. While India and Japan are members of the Quad and the IPEF, all three countries are partners in the MSP. The IPEF constitutes Quad, Fiji, New Zealand and seven major countries of ASEAN.

Policies Promoting Resilient Mineral Supply Chains

Incentives for clean technologies in India

India has made significant commitments to reduce greenhouse gas emissions and achieve net zero by 2070. This clean energy transition is required for climate change mitigation efforts, energy security, and environmental preservation. India presented five elements of its climate action strategy at the 26th Conference of Parties held in Glasgow: installing a cumulative 500 gigawatt (GW) non-fossil energy capacity by 2030; generating 50% of its energy requirements from renewable sources by 2030; reducing projected carbon emissions by one billion tonnes by 2030; reducing the carbon intensity of the economy by 45% by 2030, over 2005 levels; and achieving the target of net zero emissions by 2070.

The Government of India has initiated various schemes that incentivise domestic manufacturing of low-carbon technologies. The Production Linked Incentive (PLI) scheme, introduced in 2020, provides reimbursement mechanisms that original equipment manufacturers (OEMs) can claim on their products’ sales.

The Government of India has initiated various schemes that incentivise domestic manufacturing of low-carbon technologies. The Production Linked Incentive (PLI)  scheme, introduced in 2020, provides reimbursement mechanisms that original equipment manufacturers (OEMs) can claim on their products’ sales (Invest India, 2024). In October 2022, India introduced its second phase of the High-Efficiency Solar Photovoltaic (PV) Modules production linked incentive (PLI) scheme to reach a domestic module manufacturing capacity of 48 GW by 2026 (Ministry of Power, 2023). The government has planned to provide incentive support of ₹19,500 crore (USD 2.4 billion) to encourage the domestic manufacturing of polysilicon, ingots, wafers, cells and modules (International Energy Agency, 2023). The government has increased import duties on PV modules and cells to incentivise domestic manufacturers further.

Similarly, the government has introduced various initiatives to encourage domestic consumption and manufacturing of electronic vehicles (EVs) (Ministry of Heavy Industries, 2023). The Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME II) provides demand and production incentives wherein consumers and manufacturers can claim reimbursements from the government. FAME II was rolled out in April 2019 for five years with a budgetary allocation of ₹10,000 crore (USD 1.2 billion). The main focus of the policy is to increase the use of EVs in the public and commercial transport sectors (Department of Heavy Industries, 2019). Two other PLI schemes have enabled the domestic manufacturing of EVs and their related components: the PLI for the automobile and auto component (automotive) industry and the PLI for Advanced Chemistry Cells (ACC). The scheme for the automotive industry had an initial budget allocation from the government of about ₹25,938 crore (USD 3.2 billion). It incentivised further investments of ₹74,850 crore from approved OEMs for EVs and other components (Ministry of Heavy Industries, 2022).

Changes in India’s Mining and Minerals Policy Regime

The Ministry of Mines, Government of India, came out with the First List of critical minerals for India in June 2023.

CSEP identified a list of 23 critical minerals for India in April 2023 (Chadha, Sivamani, & Bansal, 2023). The Ministry of Mines, Government of India, came out with the First List of critical minerals for India in June 2023. The 2023 updates to India’s Mines and Minerals (Development and Regulation) Act brought in a new exploration licensing system and changes to the policies on exploring and mining minerals, previously not open to the private sector. Exploration Licences (Els) have been introduced for deep-seated and critical minerals (Ministry of Mines, 2023). Six minerals – beryllium, lithium, niobium, titanium, tantalum, and zirconium – have been omitted from the atomic minerals list of Mines and Minerals (Development and Regulation) (MMDR) Act, which were only allowed to be developed by government entities. A list of 24 critical and strategic minerals has been identified for auctions (Ministry of Mines, 2023). On November 29, 2023, the government launched its first tranche of critical mineral blocks for auction, consisting of 4 mining leases and 16 composite licenses (Ministry of Mines, 2023). The process is expected to be completed in early 2024.

Clean Energy and Minerals Supply Cooperation

India – France

The Indian Cabinet approved an India and France Memorandum of Understanding (MoU) on Renewable Energy Cooperation in 2021 to establish the basis for promoting bilateral cooperation in new and renewable energy covering solar, wind, hydrogen and biomass energy.

The Indian Cabinet approved an India and France Memorandum of Understanding (MoU) on Renewable Energy Cooperation in 2021 to establish the basis for promoting bilateral cooperation in new and renewable energy covering solar, wind, hydrogen and biomass energy (Government of India, 2021). Technology sharing and collaboration between government agencies of the two countries can help strengthen the objectives of the renewable energy cooperation. In 1988, Mineral Exploration Corporation Limited (MECL), India and Bureau de Recherches Géologiques et Minières (BRGM), France, signed an agreement for tin and tungsten exploration, mining and beneficiation (MECL, 1989). This agreement allowed MECL to use the expertise of BRGM in the beneficiation of quartz-tungsten pre-concentrates. In 2018, the French power company Electricite de France SA (EDF) and the Nuclear Power Corporation of India Limited (NPCIL) signed an agreement to set up six nuclear power plants in Jaitapur (Maharashtra) with a total capacity of 10,000 MW (Department of Atomic Energy, 2018). The bilateral understanding has been strengthened further

after the recent visit of the French President as the Chief Guest at India’s Republic Day on January 26, 2024 (Ministry of External Affairs, 2024).

Industrial investment towards building resilient supply chains is at the forefront of India-France. Imerys, a leading minerals industry from France, supplies industry players globally with access to processed minerals required for various sectors, including construction, batteries, and pharmaceuticals (Imerys, 2024). In October 2022, Imerys set up its first calcium aluminate plant in India that would provide important raw materials for the construction industry and reduce India’s import reliance on such materials (Imerys, 2018).

Indian – Japan

India and Japan announced a Clean Energy Partnership (CEP) in March 2022 to promote bilateral energy cooperation through utilising diverse energy sources and technologies to ensure energy security, carbon neutrality and economic growth.

The Indian Government has initiated a ‘Deep Ocean Mission’ to explore minerals in the Indian Ocean. Given its expertise in deep-sea mining, it could benefit from collaborating with Japan (JOGMEC, 2020). In 2020, the Japan Organization for Metals and Energy Security (JOGMEC) developed a crust excavation technique to extract nickel and cobalt from the seabed  (The Hindu, 2019). India and Japan announced a Clean Energy Partnership (CEP) in March 2022 to promote bilateral energy cooperation through utilising diverse energy sources and technologies to ensure energy security, carbon neutrality and economic growth (METI, 2022). The CEP would strengthen Japan’s Asia Energy Transition Initiative (AETI). The cooperation under this partnership has broad coverage, including electric vehicles and charging infrastructure, solar and wind energy, green hydrogen, energy conservation, and clean coal technologies (METI, 2022).

Since 2015, Indian Rare Earths Limited (IREL) has had a supply agreement with Toyotsu Rare Earths, Japan, for refining rare earth oxide (monazite) concentrates in India and Japan (The Hindu, 2023). The Indian subsidiary, Toyotsu Rare Earths India Pvt Ltd, purifies the concentrates in India and does further beneficiation in Japan with an annual target of 4000 tons (Gateway House, 2022). Japanese companies have increased their efforts to become world leaders in the EV sector. These efforts have led to Musashi and Toyota (Japan) and Delta Electronics (Taiwan) entering into a joint venture in 2023 to manufacture and sell EV drive units for two-wheelers in India (Musashi, 2023). Green energy companies in India have also focused on increasing their investments in other Asian countries. In 2023, India’s Adani Group entered into a joint venture with Kowa Holdings Asia (Japan) to sell Adani’s green hydrogen across Asia (Business Standard, 2023).

Importance of the India-France-Japan Trilateral in the Indo-Pacific

Insufficient domestic production and bottlenecks in the mineral supply chains have resulted in increasing efforts for global cooperation. The Indo-Pacific region has some leading extracting and processing countries for various critical minerals. Australia, for example, is one of the largest producers of key green energy minerals like cobalt, lithium and manganese. China’s hegemony in processing cobalt, lithium, copper, manganese, and nickel necessitates ensuring the resilience of critical mineral supply chains in the Indo-Pacific region. Countries in the Indo-Pacific are trying to reduce their dependence on minerals processed in China.

Australia has been promoting domestic investment in the critical minerals sector and is collaborating with India, Japan and Indonesia for mineral processing and technology sharing. Japan has become an important country for processing minerals vital for manufacturing green technology equipment and semiconductors (Financial Review, 2023). Japan is one of the leading countries in processing selenium (20.3%), beryllium (16.9%), nickel (8.6%) and indium (8.2%) – (Table 1). These minerals are critical raw materials in manufacturing batteries, wind turbines and semiconductors (Table 2).

Table 1: Global Mineral Processing (%)

Both India and France have expertise in the processing of select minerals. India has a significant processing capacity for manganese (13%) and copper (3%), whereas France is leading the world in the processing of hafnium (49.3%) and indium (3.6%). France is one of the EU member countries. Some other EU member countries also process some of the critical minerals. For example, Finland processes cobalt and nickel, and Germany processes copper and selenium, thus adding value to the intra-EU supply chains.

Table 2: Trilateral Mineral Cooperation

The trilateral cooperation may focus on a select group of minerals based on each country’s mining and processing expertise. These minerals would be crucial for manufacturing semiconductors and green technology equipment, including solar panels, wind turbines, electric vehicles and batteries.

Trilateral cooperation between India, France, and Japan would help the three countries share technologies and expertise in mineral processing (Table 2). Similar agreements have already existed between India-France-Australia (2020) and India-Japan-Italy (2021). While France may provide a bridge to the EU, Japan and India provide a connection to the Indo-Pacific. Such a trilateral focus on the critical minerals supply chain would promote more collaboration between the EU and Indo-Pacific countries. The trilateral cooperation may focus on a select group of minerals based on each country’s mining and processing expertise. These minerals would be crucial for manufacturing semiconductors and green technology equipment, including solar panels, wind turbines, electric vehicles and batteries. Such cooperation would incentivise domestic companies to increase their investment, capitalising on the trilateral and fostering mutually advantageous conditions for all three countries.