MINERAL SECURITY FINANCE NETWORK

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India has officially joined the US-led Minerals Security Finance Network (MSFN) to secure supply chains for critical minerals.

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India formally joined the Minerals Security Finance Network (MSFN), a US-led group focused on securing supply chains for critical minerals. This announcement was made during the United Nations General Assembly on September 23. 

About Minerals Security Partnership (MSP)

It is an international alliance formed in August 2022 by the US and 10 other nations. Currently, it includes 14 countries; the USA, Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, the Republic of Korea, Norway, Sweden, the United Kingdom, and the European Union (EU). India joined the MSP in June 2023.

Its main goal is to ensure a stable supply of critical minerals needed for clean energy technologies. These minerals include lithium, cobalt, nickel, manganese, graphite, rare earth elements, and copper.

The Minerals Security Finance Network (MSFN) is part of the Minerals Security Partnership (MSP) initiated to minimise dependency on China for critical minerals supplies.

Background China controls a significant portion of the world’s supply chains for critical minerals. It produces 60% of rare earth and critical minerals and processes 80% of them.   China has used its control over critical minerals as a tool in international disputes by stopping the export of minerals. China’s move from cooperation to pressure in its foreign relations indicates that mineral export controls will increase in future.    In August 2023, China announced that it would limit exports of antimony, a mineral crucial for military use, mentioning “national security” reasons.  Many countries, including India, depend heavily on China for critical resources like rare earth minerals. These minerals, such as cobalt, nickel, and lithium, are essential for electric vehicles (EVs) and high-tech electronics.  The MSFN aims to enhance cooperation among member countries to meet the growing global demand for these minerals. This is part of a broader strategy to counter global efforts to reduce reliance on Chinese minerals.

Objectives of the Minerals Security Finance Network (MSFN)

1. To create diverse, sustainable, and responsible supply chains for critical minerals, to ensure that the production, processing, and recycling of these minerals support economic growth.
2. To bring together Development Finance Institutions (DFIs) and Export Credit Agencies (ECAs) from participating nations to improve investment in critical mineral supply chains.

1. To minimise risk in the supply chain, as the current energy transition is at risk due to limited production capacity for these minerals, which are concentrated in just one or two countries.
2. The MSP has identified around 150 potential projects, including developing battery materials and building a minerals processing facility in South America.

India’s Participation in the Minerals Security Finance Network (MSFN)

India joined the MSFN to diversify and secure its supply of critical minerals from countries like Argentina, Chile, Australia, and some African nations. 

India aims to establish itself in the lithium value chain and reduce its dependence on imports of critical minerals like lithium, nickel, cobalt, and copper. In FY23, India spent around ₹34,000 crore on these imports.

India aims to transform its transport sector by increasing the use of electric vehicles and the energy sector by increasing renewable energy capacity. 

Joining the Minerals Security Finance Network (MSFN) is part of India’s larger plan to boost electronics manufacturing and secure a steady supply of critical minerals.

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Source: 

Indian Express

PRACTICE QUESTION Q.Consider the following statements in the context of the Minerals Security Partnership (MSP): 1. It is an initiative launched by the European Union (EU). 2. Its main goal is to ensure a stable supply of critical minerals.  3. India is a member of the Minerals Security Partnership (MSP). How many of the above statements are correct? A) Only one B) Only two C) Only three D) All four Answer: B Explanation: Statement 1 is incorrect: The Minerals Security Partnership (MSP) is an initiative launched by the United States. Statement 2 is correct: The MSP aims to secure a diverse and sustainable supply of critical minerals essential for clean energy technologies. Statement 3 is correct: India joined the MSP in June 2023.