Australia set to power India’s clean energy transition/a new technology in energy sector

 Australia and India have long maintained a friendly rivalry on the cricket pitch.

But now both countries have begun playing on an altogether different pitch — below the Earth's surface and the seabed — in their respective bids to scour for the critical minerals needed in the world's transition to clean sources of energy.

As recently as July 1, the two countries signed an interim free trade agreement — to be given shape as a comprehensive pact at a subsequent date — aimed at deepening cooperation in critical minerals and their processing.

While India seeks to tap into Australia's huge lithium and cobalt deposits, Australian government officials are prepared to go the extra mile to make their friend's access to critical minerals easier.

Indeed, the Australian government has promised to "facilitate" Indian companies' access to resources, partnerships and investments.

Critical minerals form the bedrock of this India-Australia bonhomie, especially when the latter has the world's largest deposits of lithium and the second-largest reserves of cobalt.

Critical minerals such as lithium, nickel, cobalt, copper and rare earth minerals are increasingly being sought by most countries as India finds itself on the cusp of transitioning to clean energy technologies.

While lithium is an important element in electric vehicle batteries, cobalt is used in the manufacture of aircraft engines, gas turbines, high-speed steels and corrosion-resistant alloys.

Cutting-edge technologies based on semiconductor chips are heavily dependent on critical minerals.

While silicon forms the base material for semiconductor chip manufacturing, tantalum, germanium, cobalt and some rare earth elements are also used for producing its capacitors and other systems.

Strategic defence equipment requires corrosion-resistant and high-strength critical minerals, thereby making secure and resilient supply chains essential for robust defence capabilities.

Indispensable for economies:-----

The "critical" part of critical minerals stems from two main factors: they are indispensable for economies seeking to go green and their extraction and processing are predominantly controlled by a small number of companies or countries, which results in substantial supply chain disruption risks and heightened geopolitical tensions.

Interestingly, there is no universal definition of critical minerals. It varies across states based on their respective demand and production.

The demand for critical minerals is expected to surge in the coming decades as global initiatives steer countries towards transitioning to cleaner sources of energy.

The Paris Agreement, a legally binding international treaty adopted at COP21 in 2015, aims to limit global temperature rise to well below 2 degrees Celsius above pre-industrial levels, striving for a cap of 1.5 degrees.

The UN Intergovernmental Panel on Climate Change's report on Global Warming of 1.5 degrees Celsius has underscored the catastrophic consequences of exceeding this threshold, prompting intensified global efforts towards sustainable development.

Deep decarbonisation of energy systems requires substantial quantities of critical minerals for renewable energy installations and storage solutions, making their availability and affordability essential for a successful transition.

Besides the interim free trade agreement, another significant milestone in Australia-India relations was the establishment of the Australia-India Critical Minerals Research Hub.

A joint initiative between IIT-Hyderabad and Monash University, the hub "aims to enhance research and development in the extraction and processing of critical minerals, focusing on sustainable practices and supply chain analyses".

As key Quad member states, both Australia and India are acutely aware — and wary — of China's longstanding dominance over critical minerals.

Chinese dominance:----------

Today, China dominates the supply chains of these essential minerals.

One report found that China is responsible for 60 percent of rare earth elements mining and controls about 90 percent of the processing and refining market.

China has employed geoeconomic strategies such as tax incentives for domestic firms and export restrictions on gallium, germanium and graphite which are essential for semiconductor chip manufacturing.

This would ensure not only near-endless supply for its domestic market but also establish global geopolitical leverage.

In a recent reform, China brought rare earth minerals completely under the purview of the state with an aim to protect supplies in the name of national security.

Resources essential for energy self-sufficiency and development of emerging technologies shape today's geopolitics. It is not hyperbole that critical minerals today constitute the "new oil".

A 2022 essay warned that "the highly concentrated critical mineral supply chains will increase the potential economic and security risks … Innovative technologies in the supply chains for critical minerals could mitigate the concentration and the associated risks".

The same essay argued that investment for diversification of supply chains is essential to ensure adequate supply since "game-changing innovation is likely several decades away from commercialisation".

The primary objective of the India-Australia Critical Minerals Partnership is to secure a stable supply of these essential minerals.

By collaborating, both countries aim to create a more diversified and resilient supply chain, reducing dependence on any single country.

While both nations are already seeking to reduce dependency on China on the sidelines of the Supply Chains Resilience Initiative — a trilateral cooperation between India, Japan and Australia — bilateral cooperation could significantly enhance comparative advantage for both.

Abundant reserves;-------------

Australia’s lithium, cobalt and rare earth deposits are large, and it possesses the infrastructure to cater to the Indo-Pacific's demands.

One researcher argues that the critical minerals mining sector, particularly downstream processing in Australia, offers opportunities for investment and partnerships.

Supply chain vulnerability remains a concern for countries, particularly in the Indo-Pacific, due to Chinese ambitions, so the India-Australia Critical Minerals Partnership is a step in the right direction.

An Indian ministerial level visit to Australia in 2022 paved the way for the announcement of the Critical Minerals Investment Partnership in March 2023.

Five target projects — two for lithium and three for cobalt — were identified. The partnership is expected to build new secure supply chains using Australia's mineral resources and processing capacity, in ways that will push India's emission targets lower.

Following last year’s inter-ministerial meetings in Australia, India's Ministry of Mines compiled an exhaustive list of sector-wise critical minerals.

Additionally, with the establishment of India's first semiconductor manufacturing plant at Dholera in Gujarat, collaboration with Australia assumes greater importance.

There is evidence that India and Australia have forged a strategic partnership on critical minerals with the aim to counter China's dominance.

Supply chain disruptions caused by geopolitical tensions or other reasons can have far-reaching consequences for countries reliant on these minerals.

In a strategic move, the US too has forged the Mineral Security Partnership, an alliance of 14 states, including the EU bloc, to strengthen cooperation in the Indo-Pacific by friendshoring like-minded partners. This strategy involves relocating supply chains to countries with relatable economic and political policies.

The India-Australia partnership does not overtly confront China, but it seeks to address the geopolitical reality of supply chain vulnerabilities and the need for diversified, secure sources of critical minerals.

The India-Australia partnership on critical minerals reflects the two countries' strategic autonomy and resilience and  is poised to further expand and deepen.