A background note can be accessed here: UNCTAD Warns Critical Mineral Supply Chains Are Becoming More Fragmented and Strategic
The UNCTAD report highlights a growing trend toward export restrictions, local processing mandates, and strategic control over critical mineral resources. How should countries such as India navigate the tension between securing reliable access to critical minerals and a global environment increasingly shaped by resource nationalism?
The global market for Critical Energy Transition Minerals (CETMs) is undergoing a fundamental transformation, where rapidly growing demand from the clean energy transition, digitalisation and electric mobility is colliding with highly concentrated supply chains and increasingly strategic industrial policies. UNCTAD’s analysis shows that traditional market-based sourcing is giving way to resource nationalism and state-led industrial strategies. Since January 2020, nearly 100 export-related restrictions have been introduced, including 31 licensing requirements, 37 export taxes and 29 export bans, reflecting a growing emphasis on domestic value addition over global market efficiency. For import-dependent economies such as India, these developments create greater price volatility and supply uncertainty. Securing critical minerals therefore requires a broader strategy than overseas acquisitions or bilateral supply agreements.
India must first address domestic structural barriers that discourage investment in exploration and resource development. The slow uptake of the Exploration Licence framework and restrictions on strategic minerals such as monazite-bearing beach sands continue to constrain the development of indigenous resources. The government should play a larger role in de-risking exploration by generating high-quality geological data before auctioning deposits, while establishing a dedicated critical minerals investment mechanism that provides fiscal support and price-risk mitigation for domestic mining, refining and processing projects, similar to models adopted by countries such as Japan.
Internationally, India should strengthen mineral diplomacy through long-term partnerships with resource-rich countries that extend beyond raw material procurement to include technology transfer, downstream processing and skills development. Building resilient supply chains will require combining domestic capability with diversified international partnerships and a stronger circular economy. Together, these reforms would move India beyond securing mineral supplies towards building a resilient critical minerals ecosystem capable of withstanding geopolitical and market disruptions.
The report argues that much of the value generated from critical minerals continues to accrue outside resource-producing economies, particularly in downstream processing and advanced manufacturing. How should India position its critical minerals strategy to move beyond raw material security toward broader industrial development?
Securing critical mineral supplies is only the starting point; the greater economic value lies in refining, advanced materials, manufacturing and recycling. The concentration of global processing capacity illustrates this challenge. China continues to dominate the refining of rare earths, lithium and cobalt, while Indonesia now accounts for around 43 percent of global nickel refining capacity. Securing raw ore alone therefore does not guarantee supply security if access to intermediate materials remains concentrated elsewhere. India’s strategy should focus on building an integrated value chain rather than remaining dependent on imported processed materials.
While the growing adoption of lithium iron phosphate (LFP) batteries reduces dependence on cobalt, it also reinforces dependence on highly concentrated global cathode manufacturing. India should therefore invest in technologies that diversify future battery supply chains by accelerating support for next-generation battery chemistries such as sodium-ion batteries and silicon-based anodes, while simultaneously expanding domestic capabilities in refining, precursor production, cathode materials, permanent magnets and battery manufacturing. These investments would strengthen industrial competitiveness while reducing strategic dependence on a small number of suppliers.
Equally important is the development of a robust circular economy. Battery recycling should be viewed as a strategic source of critical minerals rather than solely an environmental obligation. Moving from weight-based recycling targets to element-specific recovery targets for lithium, cobalt, nickel, graphite and rare earth elements would help ensure that strategically important materials remain within the domestic economy.
Industrial upgrading will ultimately depend on innovation, advanced manufacturing and resource recovery working together as a single national strategy. By building leadership in advanced battery technologies, downstream manufacturing and strategic recycling, India can capture greater economic value while strengthening long-term industrial competitiveness.
UNCTAD warns that governments are increasingly prioritising resilience and geopolitical security over purely market-driven sourcing decisions. To what extent does the pursuit of diversified and secure critical mineral supply chains require accepting higher economic costs?
The pursuit of resilient critical mineral supply chains inevitably involves higher costs. Diversifying suppliers, developing domestic processing capacity, maintaining strategic reserves and reducing dependence on highly concentrated markets are all more expensive than relying on globally optimised supply chains. However, the relevant comparison is not between cheaper and more expensive supply chains, but between the cost of building resilience today and the economic consequences of future supply disruptions. For India, some additional cost should therefore be viewed as an investment in long-term industrial, energy and national security rather than a loss of competitiveness.
This requires treating critical minerals as strategic infrastructure rather than simply another commodity market. Alongside continued investment in domestic exploration, government-supported geological mapping can reduce investor uncertainty before commercial auctions, while strategic reserves of selected processed critical minerals can provide a buffer against export restrictions and geopolitical shocks.
Policy must also distinguish between geopolitical risks and physical resource constraints. While trade restrictions and concentrated supply chains can be mitigated through diversification and international partnerships, long-term shortages of minerals such as copper arise from declining ore grades, limited discoveries and lengthy project development timelines. These structural constraints cannot be resolved through diplomacy alone and instead require sustained investment in substitution technologies, materials innovation and resource efficiency.
The objective, therefore, is not to maximise self-sufficiency but to build resilience. Maintaining open international markets remains in India’s interest, but a world characterised by geopolitical competition increasingly requires countries to balance economic efficiency with strategic security. For critical minerals, resilience should be understood as a long-term investment rather than an avoidable cost.