In a significant step towards ensuring a stable supply of critical minerals, India has officially joined the Minerals Security Finance Network (MSFN). This US-led initiative was launched to strengthen global cooperation in the supply chain of essential minerals like cobalt, lithium, and rare earth elements, which are crucial for sectors such as electric vehicles (EVs) and high-tech manufacturing. India’s move into this global network comes at a time when reducing reliance on China for these valuable resources has become more critical than ever.
Strengthening the Critical Mineral Supply Chain
The Minerals Security Finance Network (MSFN) was unveiled by the United States during the United Nations General Assembly meeting on September 23, 2024. This new platform aims to foster collaboration among its members — currently, 14 countries along with the European Union — and bring both public and private sectors together to invest in critical mineral supply chains.
For India, joining this network represents a key diplomatic and economic victory, especially as the country looks to accelerate its shift toward electric vehicles (EVs) and boost its electronics manufacturing industry. With critical minerals like cobalt, nickel, and lithium essential to these industries, India’s inclusion in MSFN is seen as a necessary step to safeguard its economic future.
Reducing Reliance on China
A major driver behind India’s entry into MSFN is the desire to reduce reliance on China, which currently dominates the market for rare earth elements and other critical minerals. These minerals are vital for clean energy technologies, battery manufacturing, and the production of high-end electronics.
China, which produces about 70% of the world’s rare earth elements, has built a strong infrastructure for mining and processing these minerals. Furthermore, it has secured mineral reserves in countries like Africa, giving it a tight grip over the supply of cobalt, a key component for lithium-ion batteries. India’s membership in MSFN will allow it to work closely with other nations to diversify its mineral supply sources and diminish the dominance of China in this space.
India’s Role in the Minerals Security Partnership (MSP)
India had already joined the US-led Minerals Security Partnership (MSP) in June 2023, marking its initial entry into this global critical mineral initiative. The MSP was set up in 2022 to encourage both public and private investment in supply chains for critical minerals. With the establishment of MSFN, the MSP now has a more robust structure to achieve its goals, and India’s role is expected to grow as a key participant in this network.
Both the MSP and MSFN are designed to create a collaborative platform where countries can share expertise, pool resources, and work on joint projects that help secure the supply of critical minerals. The MSP is reportedly already working on over 150 potential projects across its member countries. Several of these initiatives are aimed at improving mineral processing capabilities and developing infrastructure to meet the growing global demand for these resources.
Why India’s Membership is Crucial
India’s decision to join MSFN comes at a time when the country is heavily investing in renewable energy and electric vehicles. The transition to EVs is one of the major elements of India’s development strategy. Critical minerals like lithium, nickel, and cobalt are crucial for the batteries that power EVs, and securing a steady supply of these minerals is essential for India’s ambitions to reduce carbon emissions and cut reliance on fossil fuels.
Additionally, India is striving to become a major player in electronics and semiconductor manufacturing. Rare earth minerals, especially heavy rare earth elements (HREE) like dysprosium, terbium, and europium, are vital for producing semiconductors and other high-tech electronics. India does have some reserves of light rare earth elements (LREE) like lanthanum and cerium, but it remains heavily reliant on imports for HREE, most of which come from China.
Joining MSFN offers India a pathway to collaborate with other countries to secure the raw materials it needs. With the potential for global shifts in battery technology and new advancements in lithium-ion batteries, India must position itself as a player in the critical minerals market.
Global Impact of India’s Move
India’s participation in MSFN is also a significant geopolitical move. As more countries look to decarbonize their economies and move toward renewable energy sources, the demand for critical minerals is expected to rise dramatically. For now, much of the world’s supply of these minerals is concentrated in a handful of countries, most notably China. This imbalance creates vulnerabilities in global supply chains, making it imperative for nations like India and the US to work together and build more resilient networks.
The MSFN and MSP offer a solution by bringing together key players in both the public and private sectors to collaborate on securing the minerals needed for future technologies. By working with global partners, India can ensure that its economic growth isn’t stifled by a shortage of essential minerals.
Next Steps for India
As part of MSFN, India will now have access to a wider pool of investment and resources to explore and develop its critical mineral projects. Additionally, the partnerships formed through this network will enable India to reduce its dependence on any single country for its mineral needs. This will have long-term benefits for India’s electronics, renewable energy, and electric vehicle sectors.
With MSFN and MSP’s joint efforts, the coming years could witness a transformation in how critical minerals are sourced, processed, and utilized globally — and India is now at the heart of this change.
