INDIA’S MINERAL PLAN IN AFRICA

• Objective: Ramp up resource securitisation in Africa and challenge China's dominance in the region.

• Collaborations: India has signed MoUs with at least eight African nations for mining collaborations, including: (GURU prasad map)

• South Africa

• Mozambique

• Congo

• Tanzania

• Zambia

• Malawi

• Republic of Côte d’Ivoire

• Zimbabwe

Focus on Critical Minerals

Strategic Interests

• Cobalt and Copper: Essential for EV battery production, apart from lithium

• Key Areas: The Copperbelt region in Congo and Zambia.

India's Approach

• G2G Negotiations: 

• India is leveraging government-to-government (G2G) negotiations to secure mining collaborations and access agreements with African nations.

• This allows the mines on a nominated basis.

• Private Investment: This allows direct investment by Indian companies.

• Recent Developments:

• February: MoU signed with Republic of Cote d’Ivoire for collaboration in geology and mineral resources.

• Discussion with:

• Tanzania: Interest in niobium and graphite.

• Zimbabwe: Focus on lithium.

• Congo and Zambia: Targeting copper and cobalt.

IMPORTANCE

• Resource Security

• Diversification of Supply: 

• India seeks to diversify its sources of critical minerals such as coal, iron ore, gold, and rare earth elements. 

• Africa is rich in these resources, reducing India's reliance on traditional suppliers.

• Over 30% of the world's critical mineral deposits are found in Africa, presenting an opportunity for African countries to become major global suppliers and trade among themselves.

• Energy Needs: 

• Ensure a stable and reliable supply of critical minerals for India's domestic industries, particularly the growing electric vehicle (EV) and renewable energy sectors.

• Economic Growth

• Industrial Development: 

• Access to African minerals supports India's manufacturing and industrial sectors, fueling economic growth and job creation.

• Cost-Effective Resources: 

• Procuring minerals from Africa can be cost-effective due to lower extraction and transportation costs compared to other regions.

• Strategic Partnerships

• Strengthening Ties:

• Engaging in mineral trade fosters stronger bilateral relations between India and African nations. 

• These partnerships can extend beyond trade to areas like technology transfer, infrastructure development, and education.

• India is leveraging government-to-government (G2G) negotiations to secure mining collaborations and access agreements with African nations.

• A Confederation of Indian Industry (CII) report stated that Indian investments in Africa could reach USD 150 billion by 2030.

• Geopolitical Influence: 

• Establishing a foothold in Africa helps India enhance its geopolitical influence, counterbalancing the presence of other major powers like China.

• Development Aid and Investment

• Infrastructure Projects: 

• India invests in infrastructure projects in Africa, such as roads, railways, and ports, which facilitates the export of minerals, fostering economic development of African countries.

• Market Expansion

• Export Opportunities: 

• India not only imports minerals but also exports mining equipment, technology, and expertise to African countries, creating a symbiotic economic relationship.

• Trade Balance: 

• Increasing mineral imports from Africa can help balance trade, with India exporting finished products and technology in return.

• Geopolitical Stability

• Regional Stability: 

• By engaging economically with African countries, India contributes to the economic stability and development of the region, which can lead to greater political stability.

CHALLENGES

• Political Challenges

• Political Instability: Many African countries face political instability, including civil wars, coups, and frequent policy changes, which can disrupt mining operations and investments..

• Corruption: High levels of corruption in some African countries can hinder business operations, lead to increased costs, and create legal risks.

• Economic Challenges

• Infrastructure Deficits: Poor infrastructure, including inadequate transportation networks, power supply, and communication systems, can increase operational costs and delays.

• Financial Risks: Economic instability, including currency fluctuations, inflation, and limited access to finance, can affect the viability of mining projects.

• Logistical Challenges

• Transportation Issues: The lack of developed transport networks can make it difficult to move heavy mining equipment and extracted minerals, leading to higher logistics costs.

• Remote Locations: Many mineral deposits are located in remote areas with limited accessibility, posing challenges for both initial exploration and ongoing operations.

• Environmental Challenges

• Environmental Regulations: 

• Compliance with environmental regulations can be complex and costly. 

• Stricter environmental laws, both in African countries and in India, require substantial investments in sustainable mining practices.

• Competition and Market Dynamics

• Global Competition: India faces stiff competition from other countries, particularly China, which has already established a strong presence in Africa's mining sector.

• China is estimated to control over 5% of cobalt processing facilities in the Democratic Republic of Congo (DRC).

• Chinese companies are estimated to own 80% of the Tenke Fungurume mines, which produce nearly 12% of the world's cobalt resource.

• China has also made substantial investments in securing lithium resources in Zimbabwe.

• Technological and Skill Gaps

• Technology Transfer: Implementing advanced mining technologies requires substantial investment and expertise, which may not always be available locally.

• Skill Shortages: There may be a lack of skilled labour in some regions, necessitating training programs and potentially increasing operational costs.

WAY FORWARD

• Strengthening Political and Diplomatic Ties

• Bilateral Agreements: 

• India should negotiate long-term bilateral agreements with African countries to ensure stable and favourable mining conditions. 

• Diplomatic Engagement:

• Increased diplomatic efforts, such as high-level visits, summits, and forums like the India-Africa Forum Summit, can strengthen political ties and build trust.

• Infrastructure Development

• Investing in Infrastructure: India can invest in building and upgrading infrastructure in African countries, which would facilitate mining operations and transport of minerals. 

• Public-Private Partnerships (PPPs): Engaging in PPPs can help pool resources and expertise to develop necessary infrastructure.

• Example: Indian companies can collaborate with African governments and international financial institutions to fund these projects.

• Enhancing Regulatory and Legal Frameworks

• Regulatory Harmonisation: 

• India can work with African countries to harmonise regulatory frameworks, making it easier for Indian companies to operate, which involves standardising mining regulations and simplifying permitting processes.

• Community Engagement: 

• Ensuring local community involvement and providing fair compensation and development benefits can mitigate social conflicts. Projects like the Karmøy project in Norway by Hindustan Zinc Ltd., which includes community development programs, can serve as a model.

• Technological and Skill Development

• Technology Transfer:

• Indian companies can bring advanced mining technologies to Africa. 

• For example, using remote sensing technology for mineral exploration and automated machinery for extraction can increase efficiency and reduce environmental impact.

• Training and Capacity Building: 

• Establishing training centres and educational programs can help develop local skills. 

• Collaborations with African universities and vocational institutes can build a skilled workforce. 

• Financial Strategies

• Risk Mitigation:

• Utilising financial instruments such as insurance, hedging, and guarantees can mitigate financial risks. 

• The Export Credit Guarantee Corporation of India (ECGC) can provide insurance against political and commercial risks for Indian investments in Africa.

• Investment Funds: 

• Creating dedicated investment funds for African mining projects can pool resources and spread risks.

• The India-Africa Infrastructure Development Fund is an example of such an initiative.

• Leveraging International Partnerships

• Multilateral Cooperation: Engaging with multilateral organisations like the World Bank and African Development Bank can provide additional funding and support. 

• Triangular Cooperation: Collaborating with other countries that have a strong presence in Africa, like Japan or the EU, can enhance India's efforts through shared projects and initiatives.

INDIA’S INITIATIVE TO SECURE CRITICAL MINERALS

• Mines and Minerals (Development and Regulation) Amendment Act, 2023

• Omission of 6 minerals from the list of 12 atomic minerals: 

• Allows the private sector to mine minerals such as lithium, beryllium, niobium, titanium, tantalum and zirconium.

• Amendment provides conducive legal environment for attracting FDI and junior mining companies

• Khanij Bidesh India Ltd (KABIL): 

• It is a joint venture of National Aluminium Company Ltd (NALCO), Hindustan Copper Ltd (HCL), and Mineral Exploration and Consultancy Ltd (MECL) , the Central Public Sector Enterprises (CPSEs) under the Ministry of Mines.

• It aims to source and process strategic minerals from foreign sources, particularly focusing on battery minerals for supply in India.

• Minerals Security Partnership (MSP):

• India joined the Mineral Security Partnership (MSP) in June 2023, making it the 14th member alongside countries like the United States, Australia, Canada, and others.

• India seeks to leverage this framework to aid Indian public sector undertakings (PSUs) in acquiring critical mineral assets abroad.

  
  

  SHORT TAKE 

  • Mines and Minerals (Development & Regulation) Amendment Act, 2023

  • Royalty rates: To specify royalty rates of Lithium, Niobium and Rare Earth Minerals.

  • Expansion of Private Sector Involvement:

  • Removal of 6 minerals from atomic minerals.

  • Minerals include lithium, beryllium, niobium, titanium, tantalum, and zirconium.

  • Exclusive Auctioning Authority for Critical Minerals:

  • Central Government empowered to exclusively auction mineral concessions.

  • Includes rare earth elements, graphite, cobalt, lithium, nickel, phosphate, potash, and tin.

  • Revenue directed to concerned State Governments

  • Introduction of Exploration Licences (EL):

  • Aimed at attracting Foreign Direct Investment (FDI) and engaging junior mining companies.

  • Focus on deep-seated and critical minerals like gold, platinum, rare earth elements, etc.

  • Preferred bidder selected through reverse bidding.

CONCLUSION