Climate proofing the Critical Minerals Conversation

Can Australia and India’s cooperation on critical minerals take an integrated approach to address resource security and climate concerns?

Introduction

The Australia-India bilateral relationship is witnessing a high moment with five years of the Comprehensive Strategic Partnership, and the release of the New Roadmap for Australia’s Economic Engagement with India. The new roadmap released by Foreign Minister Penny Wong seeks to bolster critical minerals cooperation by leveraging research and investment engagements to strengthen supply chains, add export value, increase investment pipelines and co-develop mining and processing technology.

Australia and India have been stitching a critical minerals cooperation since 2020, eliminating tariffs on Australian mineral exports to India, collaborating on minerals research, and exploring five joint lithium and cobalt projects. Joint research partnerships focussing on building diversified, resilient, and responsible supply chains, creating new jobs and industries for Australia and India were launched in 2022.

In parallel, the Critical Minerals Investment Partnership sought to build new supply chains underpinned by critical minerals processed in Australia that will help India’s plans to lower emissions from its extensive growth plans that include large-scale electricity networks, manufacturing, including EVs, and other areas of mutual benefit. There is a cyclical relationship between the need for critical minerals to achieve net zero and larger climate-positive targets on the one hand and ensuring that the production, processing and distribution of these minerals are sustainable on the other hand. As this conversation expands into implementation, it is critical that a strong climate lens is applied to ensure that actions in this sector do not hamper the cooperation and benefits in the NetZero and NDC areas.

Critical minerals are key ingredients for the green transition

Critical minerals, such as lithium, cobalt, copper and rare earth metals, are the building blocks for clean technologies such as EV batteries, solar panels and wind turbines. Critical minerals are also vital inputs for defence systems, telecommunications, automobiles and the healthcare sector. Global demand for critical minerals is estimated to be worth as much as USD 378 billion.

Until the mid-2010s, the share of clean energy technologies in total demand for most critical minerals was minuscule. However, energy transitions are already the major driving force for total demand growth for some minerals. Since 2015, EVs and battery storage needs have surpassed consumer electronics to become the largest consumers of lithium, together accounting for 30% of total current demand, with an accelerating trend. Clean energy technologies become the fastest-growing segment in minerals, with a total demand share edging over 40% for copper and REEs, 60-70% for nickel and cobalt and almost 90% for lithium by 2040. However, producing these minerals in adherence to robust environmental, social, and governance criteria will be challenging in the face of rising demand.

Mapping Critical Minerals for the green sectors across Australia and India

The table below is a brief snapshot of Australia and India’s critical minerals and strategic minerals lists, mapping India’s current import dependence for minerals.We focus on minerals which are necessary inputs for India’s green transition- including those used for manufacturing batteries, grid storage, renewable energy, and solar and wind technologies. India’s demand for minerals is rising steadily and is expected to peak around 2050.

It is noteworthy that several minerals needed for India’s green transition are geologically abundant in Australia.

Balancing the need for more minerals with environmental goals

Australia produces almost half of the world’s lithium, alongside being the world’s second-largest producer of cobalt and the fourth-largest producer of rare earths. However, as a major producer nation, Australia is navigating environmental challenges of mining and processing critical minerals, including habitat destruction, water pollution, and biodiversity loss. Several critical minerals have low recycling rates and the shrinking secondary demand for copper and nickel has created a need to incorporate sustainability in manufacturing and minerals recovery processes. According to IEA estimates, successful scale-up of recycling can lower the need for new mining activity by 25-40% by 2050, a scenario that meets national climate pledges.

Terrestrial ecosystems face high impacts due to critical minerals mining, which requires space for exploration, extraction and processing, and distribution. Mining operations also require substantial amounts of water for mineral extraction, processing, dust suppression, and equipment cooling. Metal refinery and processing production processes, and solar thermal power generating technologies also require large amounts of water for cooling. At the same time, mining, manufacturing, and electricity supply sectors are extremely vulnerable to disruption by climate change. Mining was Australia’s largest sector by share of GDP accounting for 10% during the 2022 financial year. About $7 billion of the Future Made in Australia bill’s funding will go to downstream refining and processing of the 31 critical minerals over the medium term. Given that environmental costs rise as downstream processing develops, keeping Australia’s environment secure will have to go hand in hand with the opportunity minerals offer. In addition to ecological concerns, more than 60 per cent of Australian resource projects operate on land covered by a Native Title claim or determination. In the Northern Territory, approximately 50 per cent of the landmass is freehold Aboriginal land where Traditional Owners have the right to veto any land access use proposals. First Nations landholders and communities are key stakeholders in the resources sector and essential to its future sustainability.

Current critical minerals policies in Australia, India and beyond demand deeper understanding and integration with environmental impacts and larger climate-related targets and goals. Both countries currently have ambitious climate targets, either pegged to the Paris Goals or related to national growth ambitions at the domestic level. Under the Paris Agreement, Australia committed to reducing greenhouse gas emissions by 43% below 2005 levels by 2030 and to achieving net-zero emissions by 2050. These targets were updated in the 2022 Climate Change Act, a critical framework to formalise commitments and create a more structured response to climate change across all sectors of the economy.

India’s targets are equally ambitious. With an aim to reduce its emissions intensity by 45% below 2005 levels by 2030 (excluding LULUCF), and to increase the share of non-fossil power capacity to 50% by 2030, India has set in motion several varied plans and schemes to achieve this. While the growth of the minerals supply plays a vital role in enabling a clean energy transition, if poorly managed, the production and processing of these minerals can lead to a myriad of negative consequences, including a significant increase in greenhouse gas emissions arising from energy-intensive mining and processing activities, loss of biodiversity, and pollution.

Expanding the idea of “risks” to include climate security

At COP28, the UN Secretary-General António Guterres launched an initiative addressing these concerns, stating that the extraction of minerals needed for green energy must be ‘sustainable and just’, and that the green energy boom is an opportunity for commodity-rich developing countries to transform and diversify their economies. Finally, it must be kept in mind that despite growing policy ambitions, the use of recycled materials has so far failed to keep pace with rising material consumption. These concerns animate both Australia and India with regards to their critical minerals sectors and open a ripe space for cooperation. This can occur through a few different options bilaterally and in the multilateral space –

1. Establishing a climate article within the Australia-India Critical Minerals Research Partnership to ensure that a smart future-forward climate understanding is integrated from the research and initial planning stage. Here both countries can agree on mechanisms for production, supply and application – as a method and not as a goal post. Within these vertical categories, country-specific risks can be mapped, defined and measured. As Australia is a mining-heavy export-oriented nation, the risks are considerably different from those in India and thus an understanding of domestic drivers and contextual factors will be necessary.
2. Creating a network of scholars who work at the intersection of climate change, future energy targets, and critical minerals can increase circles of analysis and create new innovative areas of engagement. This could be modelled on or held within the STEM scholars’ network that exists between India and Australia to ensure that resources and capacity within both countries are not duplicated or strained, and new opportunities (such as deep-seabed minerals mining) are jointly explored with sustainability as a core.
3. Joint efforts in the multilateral space will also be needed to ensure efficient collaboration with like-minded partner countries to agree on common standards and mobilise investment and sustainable transition. One such space could be the International Solar Alliance, which has already demonstrated positive efforts and success in driving significant change through its specific, policy-focussed working groups. The ISA is also conducting conversations with member states to work more closely together on critical minerals and India and Australia can work closely with other regional partners to bring a stronger climate lens and best practices from joint renewable energy projects to this conversation.

There are a number of opportunities and advantages for India and Australia to collaboratively mitigate the risk in critical minerals supply chains. A key component of risk mitigation here would be to bring a clear climate understanding to the sector, both with production and supply and implementation. Often in attempting to be cleaner at one end, sectors can create a cycle of risk that will need a whole new set of adaptation and mitigation strategies in the future. There is a need to widen the debate in the sector to ensure that long- term goals of sustainable transition and development for all are not in flux with the need to combat future climate challenges and cascading risks. The relationship is only going to continue and strengthen, and by working together on advocating and implementing a stronger climate lens in our critical mineral future at this juncture would pave the way for a more resilient future for both countries.

This article was written as part of the Australia India Institute. All views expressed in this article are those of the authors only. Originally published in March 2025.