Kunal Powde

The Reserve Paradox
Electric Vehicles have changed how the world drives in the past few years. As the planet transitions towards a new green age of alternatives, sales of electric cars exploded to more than 17 million globally in 2024, accounting for more than 20% of sales [1], and are estimated to exceed 40% in 2030, assuming current policies alone [1]. However, this boom of EVs also demands key and rare minerals for production, primarily battery and motor-related minerals. As per McKinsey’s insight, battery manufacturers now use 80% of the lithium mined and is expected to reach 95% by 2030 [2], but lithium reserves tend to be scarce as four countries; Chile, Australia, Argentina and China have more than 23 million tonnes out of total 28 million tonnes known reserves, within which Australia was largest producer in 2025 while Chile had largest amount of reserves [3]. This created complex geopolitics along with global competition among nations as well as private mineral players.

The Mineral Bottleneck: China’s Entry in Mineral Markets

Batteries, especially in EVs require higher grades of minerals such as Cobalt, Nickel, and Lithium that are scarce and heavily required for mass manufacturing but either these elements are concentrated in a few regions such as Lithium’s case mentioned earlier or if available, then it is in limited quantity that it is not economical to mine, creating a strategic chokepoint. Moreover, only a few countries have mining and refining capabilities, within which China tops the whole chain of mining and refining rare earth elements (REE), making it one of the global monopolies of minerals. For context, China in the years 2020-2024 contributed 70-80% of supply growth in Copper and Lithium while controlling the production of 90% of battery-grade graphite and rare earth, making the nation a dominating figure in the EV Industry [4]. China’s REE growth can be said as one of the outcomes of the Belt-Road Initiative and the geopolitical investment made by Xi in the African and Latin American soils, allowing the red dragon to diversify its production and autonomy [5]. Another hiccup in the EV revolution is rare-earth elements such as neodymium, terbium, and dysprosium that are used in the manufacturing of high-grade magnets, and China holds a monopoly on their production.

World vs China: Minerals Weaponized

Today, China’s emergence in battery-mineral production and refining has created geopolitical ripples across the globe. As more nations fall into dependency on the Jinping regime, more regulations and restrictions on minerals will be seen in the future, while hurting the domestic markets and companies of dependent countries. Within April-June of 2025, heads at Beijing had initiated stricter customs inspections and complete restriction of rare earth export as a response to the Trump tariff-war, leading to production halt warnings from various western automobile manufacturers such as General Motors, Toyota, and Volkswagen, as well as Indian automaker Bajaj Auto [6]. Another case of Chinese impact came from Chief Executive Stefan Scherer of AMG Lithium, the EU’s first Lithium Hydroxide factory, stating the overdependency of European countries on Chinese lithium and the lack of protection for domestic production [7].

Western Countermeasures and Trump’s Policy Impact

The West, in particular, the United States and the EU, has sought countermeasures against Chinese imports by either promoting domestic production by providing Tax credits or by imposing various import restrictions and caps; however, the over-dependence on Chinese reserves has foiled efforts thus far.

Trump’s recent return to power has made the mineral paradox and China’s dominance even more obvious at the global level as China weaponizes the mineral supply in trade negotiations by restricting REEs and tampering global supply of not just minerals but also of by-products such as EV and EV components, leading to EV Automakers to switch for newer methods for mineral acquisition, while the Trump U.S. removes the tax credit and incentives for domestic production of minerals through Big Beautiful Bill [8], causing damage to its industries while indirectly increasing Chinese dependency.

Tesla 2021 itself had started tie-ups with direct miners, including the ones of Chinese origin, such as Sichuan Yahua Industrial Group and Ganfeng Lithium, while making its Lithium plant in Texas and even outsourcing batteries from Panasonic and reportedly from its China-based EV competitor – BYD [9]. General Motors, a reputed US Defence organization, signed a similar deal with Vianode to acquire synthetic graphite, circumventing Chinese dependency on raw materials [10].

India’s Critical Mineral Crisis: EV Makers on Halt

India’s EV Sector faces a similar yet more complex challenge to meet its domestic need for REEs and Critical Minerals as the country’s dependency on imports increases over the years. For context, in 2023, Rare Earth Metals, Scandium, and Yttrium worth $4.902 million were imported by India, within which China alone accounted for around 99% of total imports [11]. Moreover, India’s import reliance was 100% on critical minerals such as Lithium and Nickel [12], indicating a lack of self-production and facilities to mine our reserves. Moreover, few elements such as Tungsten, Tantalum, and Strontium have no availability thus far within the nation [12], solidifying dependence on imports to meet demands. This demands a high time for the nation to find newer ways to acquire these necessary minerals and their ores while avoiding any risk of international sanctions or penalties in this new world order.

Indian Household giant, Tata Motors, because of the same, has already started initiatives to find new avenues with non-Chinese suppliers [13, while reducing its rare earth dependency through R&D efforts [14]. Despite best efforts, however, Indian automakers face a halt in the production lines and financial stress along the lines of China’s curbing policies [15]. This halt is even more concerning when we account for the Chinese competitor, BYD, threatening the Indian EV manufacturers with its rapid household growth and even seeking to establish domestic manufacturing plants [16]. These recent developments have made India’s discovery of new mineral sites and production plans even more crucial for the future of EVs.

India’s Search for New Avenues: New Mines and Ways

Geological Survey of India in 2023 had confirmed Lithium deposits estimated at around 5.9 million tonnes in J&K’s Reseai district [17], leading to positive responses from the automotive leaders such as Mitsubishi, Tesla, and even India’s Ola Electric for bid process however as of 2025 [18], the deposits have failed to attract any fruitful auction, twice in November of 2024 to secure minimum of 3 bids and again twice in March 2024 [19]. Turns out that the deposits were clay-based, which is harder to process for any economic viability, discouraging investment [20]. Moreover, J&K’s unstable political tensions with Pakistan and its state-sponsored terrorism worsened the interest further. Thus far, the Lithium block in Chattishgarh has been auctioned, and the model has yet to be replicated for other mines [21].

Given this foreign dependency on REEs, the Government of India has started National Critical Mineral Mission (NCMM) in 2025, aiming to carry out 1200 exploration projects from 2024-25 to 2030-31 by Geological Survey of India (GSI) along with departmental assistance from Atomic Minerals Directorate for Exploration and Research and production from IREL (India), a Public Sector Undertaking under Department of Atomic Energy (DAE) [22]. One such example comes from Rajasthan, where GSI is undertaking projects related to the production and auctioning of REEs [23]. Moreover, plans of ramping domestic production through a scheme worth US$404-577 million are in discussion [24], while the commerce ministry seeks to halt exports of REEs such as neodymium to allied nations such as Japan [25]. Apart from domestic mining, successful acquisition and exploration of foreign mines, such as those in Argentina and Chile, will also be required if we have to mimic the path of the red dragon. One such recent instance was in Argentina, where Khanij Bidesh India Ltd (KABIL) secured a $24 million lithium exploration pact for five blocks in January 2024, allowing the nation to diversify its reach [26]. Such examples will require closer foreign relationships with the countries with mineral-rich hotspots.

What’s Next for the World: Mineral Wars?

India is not alone in this journey of self-mineral reliance from China’s grip, though, as other countries, especially the ones in the Indo-Pacific, figure out how supply lines can be diverted from BRI. Quad countries- US, India, Japan and Australia are moving aggressively towards a new mineral supply chain [27], where Australia seems to be leading the charge thanks to the reserves it has and aims to become a new China for processing the minerals along producing [28], however at current standing, Australia already faces multiple issues with the mining hazards and environmental issues such as dust and water pollution along with breaching ecological sensitive zones such as Great Barrier Reef, that has led to outrage from locals [29].

China will continue to boast its mineral dominance for the upcoming decades, as any immediate change in the supply chain won’t happen unless the countries start investing their time and efforts in the Research and Development of their REE and Critical mineral search and extraction. Countries such as the U.S. and India that have emerging EV Markets have to take initiatives as their whole automobile industry, both EV & non-EV based, shows vulnerability to China. India, especially as the neighbour lurks to dump its minerals in the sub-continent, which will not just frustrate mineral research but also threaten the nation’s Atmanirbhar mission. Moreover, Trump’s New U.S now makes international relations even more complicated, as on one hand, China and the U.S stand against each other, and India finds itself in an easier position to push China + 1; however on the other hand, with the U.S now punishing EVs and pushing for domestic mineral extraction, the question arises how is the Globe going to respond to the crisis with one of the superpowers in the sidelines.

References

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