What are Critical Minerals?

India and Australia have decided to strengthen their partnership in the field of projects and supply chains for critical minerals.

What is the news?

Australia has confirmed that it would commit A$5.8 million to the three-year India-Australia Critical Minerals Investment Partnership”.

What are Critical Minerals?

Critical minerals are elements that are the building blocks of essential modern-day technologies, and are at risk of supply chain disruptions.

These minerals are now used everywhere from making mobile phones, computers to batteries, electric vehicles and green technologies like solar panels and wind turbines.

Based on their individual needs and strategic considerations, different countries create their own lists.

However, such lists mostly include graphite, lithium, cobalt, rare earths and silicon which is a key mineral for making computer chips, solar panels and batteries.

Aerospace, communications and defence industries also rely on several such minerals as they are used in manufacturing fighter jets, drones, radio sets and other critical equipment.

Why is this resource critical?

As countries around the world scale up their transition towards clean energy and digital economy, these critical resources are key to the ecosystem that fuels this change.

Any supply shock can severely imperil the economy and strategic autonomy of a country over-dependent on others to procure critical minerals.

But these supply risks exist due to rare availability, growing demand and complex processing value chain.

Many times the complex supply chain can be disrupted by hostile regimes, or due to politically unstable regions.

They are critical as the world is fast shifting from a fossil fuel-intensive to a mineral-intensive energy system.

What is China ‘threat’?

China is the world’s largest producer of 16 critical minerals.

China alone is responsible for some 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.

The level of concentration is even higher for processing operations, where China has a strong presence across the board.

China’s share of refining is around 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.

It also controls cobalt mines in the Democratic Republic of Congo, from where 70% of this mineral is sourced.

In 2010, China suspended rare earth exports to Japan for two months over a territorial dispute.

What are countries around the world doing about it?

US has shifted its focus on expanding domestic mining, production, processing, and recycling of critical minerals and materials.

India has set up KABIL or the Khanij Bidesh India Limited to ensure mineral security of the nation.

Australia’s Critical Minerals Facilitation Office (CMFO) and KABIL had recently signed an MoU aimed at ensuring reliable supply of critical minerals to India.

The UK has unveiled its new Critical Minerals Intelligence Centre to study the future demand for and supply of these minerals.

Environment Protection Act (EPA), 1986

The Union Environment Ministry proposes to soften the provisions of the EP Act (EPA) by replacing a clause that provides for imprisoning violators with one that only requires them to pay a fine.

Environment Protection Act (EPA), 1986

EP Act was passed under Article 253 of the Constitution, which empowers the Centre to enact laws to give effect to international agreements signed by the country.

The purpose of the Act is to implement the decisions of the UN Conference on the Human Environment.

They relate to the protection and improvement of the human environment and the prevention of hazards to human beings, other living creatures, plants and property.

It was enacted in 1986 on the backdrop of Bhopal Gas Tragedy.

The Act was last amended in 1991.

Why this Act?

The Act is an “umbrella” legislation that has provided a framework for the environmental regulation regime in India.

It covers all major industrial and infrastructure activities and prohibits and regulates specific activities in coastal areas and eco-sensitive areas.

The Act also provides for coordination of the activities of various central and state authorities established under other environment-related laws, such as the Water Act and the Air Act.

Key provisions

The Environment (Protection) Rules lay down procedures for setting standards of emission or discharge of environmental pollutants.

The objective of Hazardous Waste (Management and Handling) Rules, 1989 is to control the generation, collection, treatment, import, storage, and handling of hazardous waste.

The Manufacture, Storage, and Import of Hazardous Rules define the terms used in this context, and sets up an authority to inspect, once a year.

The Cells Rules,1989 were introduced with a view to protect the environment, nature, and health in connection with the application of gene technology and micro-organisms.

Purchasing Managers Index (PMI)

India’s services firms saw growth in new business and output accelerate to a 11-year high in June, as per the survey-based S&P Global India Services Purchasing Managers Index (PMI).

What is the news?

The index rose to 59.2 last month, from 58.9 in May, signalling a strengthening in demand across the services sector, which had borne the brunt of the COVID-19 pandemic.

Purchasing Managers’ Index (PMI)

PMI is an indicator of business activity — both in the manufacturing and services sectors.

It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.

It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.

The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

How is the PMI derived?

The PMI is derived from a series of qualitative questions.

Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

How does one read the PMI?

A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.

Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.

If the figure is higher than the previous month’s then the economy is expanding at a faster rate.

If it is lower than the previous month then it is growing at a lower rate.

What are its implications for the economy?

The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.

It is, therefore, considered a good leading indicator of economic activity.

Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.

Central banks of many countries also use the index to help make decisions on interest rates.

A five-point plan to boost renewable energy

As the fallout of Russia’s invasion of Ukraine ripples across the globe, the response of some nations to the growing energy crisis has been to double down on fossil fuels, pouring billions more dollars into the coal, oil and gas that are deepening the climate emergency.

Need for transition to renewable energy

Fossil fuels are the cause of the climate crisis.

Renewable energy can limit climate disruption and boost energy security. Renewables are the peace plan of the 21st century.

But the battle for a rapid and just energy transition is not being fought on a level field.

Investors are still backing fossil fuels, and governments still hand out billions in subsidies for coal, oil and gas — about $11 million every minute.

The only true path to energy security, stable power prices, prosperity and a livable planet lies in abandoning polluting fossil fuels and accelerating the renewables-based energy transition.

We must reduce emissions by 45 per cent by 2030 and reach net-zero emissions by mid-century.

But current national commitments will lead to an increase of almost 14 per cent this decade.

Reducing cost:  The cost of solar energy and batteries has plummeted 85 per cent over the past decade.

The cost of wind power fell by 55 per cent. And investment in renewables creates three times more jobs than fossil fuels.

Nature-based solutions: Of course, renewables are not the only answer to the climate crisis.

Nature-based solutions, such as reversing deforestation and land degradation, are essential.

So too are efforts to promote energy efficiency.

But a rapid renewable energy transition must be our ambition.

Five point plan to boost renewable

1] Renewable energy technology as global good: We must make renewable energy technology a global public good, including removing intellectual property barriers to technology transfer.

2] Improve global access: We must improve global access to supply chains for renewable energy technologies, components and raw materials.

In 2020, the world installed five gigawatts of battery storage.

We need 600 gigawatts of storage capacity by 2030.

Shipping bottlenecks and supply-chain constraints, as well as higher costs for lithium and other battery metals, are hurting the deployment of such technologies and materials.

3] Fast-tracking : We must cut the red tape that holds up solar and wind projects.

We need fast-track approvals and more effort to modernise electricity grids.

4] Shifting energy subsidies: The world must shift energy subsidies from fossil fuels to protect vulnerable people from energy shocks and invest in a just transition to a sustainable future.

Increase investment in renewables: We need to triple investments in renewables.

This includes multilateral development banks and development finance institutions, as well as commercial banks.

Conclusion

When energy prices rise, so do the costs of food and all the goods we rely on. So, let us all agree that a rapid renewables revolution is necessary and stop fiddling while our future burns.