India has dived deep into exploration and development of offshore mineral resources with the first tranche of 13 blocks, spanning across the Arabian Sea and Andaman Sea, put up for e-auction.
This auction and exploration is being touted as a historic step toward resource independence while strengthening the country’s commitment to achieving net-zero emissions by 2070, a goal presented at COP26 in Glasgow. These 13 blocks contain resources like construction sand (off the Kerala coast), lime-mud (off the Gujarat coast) and polymetallic nodules and crusts (West Sewell Ridge area, off the Great Nicobar Island).
Development of these offshore blocks has the potential to create jobs, foster economic growth, and contribute to the GDP by unlocking India’s blue economy. This step towards tapping the nation’s vast undersea resources also aligns with its push to secure critical minerals needed for enhancing its technological capabilities and its position as a global player in the offshore mining sector in the journey towards a ‘Vikshit Bharat’.
Harnessing Mineral Wealth
India’s Exclusive Economic Zone (EEZ) of over 2 million sq. km. holds significant mineral resources. Its offshore mineral reserves include gold, diamond, copper, nickel, cobalt, copper, manganese, and rare earth elements found on the continental shelves and beneath the seabed.
The government’s Vision of New India by 2030 enunciated in February 2019 highlighted the blue economy as one of the ten core dimensions of growth. It currently accounts for roughly 4 per cent of the country’s GDP and represents a sea of opportunities with a 7,517-kilometre-long coastline, nine coastal states and 1,382 islands.
In 2021, India launched Deep Ocean Mission (DOM) for developing technologies and capabilities like manned submersibles and underwater robotics to access and transport tonnes of valuable minerals from the ocean-bed in an environmentally safe manner. One of the major objectives of this project with a budget overlay of Rs 4,077 crore for five years, is to mine and extract polymetallic nodules (PMN).
The harbour trial for India’s first manned deep sea mission, Samudrayaan, is scheduled for 2025 and 2026 when three personnel will be sent to 6000-metre depth in a vehicle called ‘MATSYA 6000’ for the exploration of deep-sea resources. The success of this mission will place India among an elite group of nations – United States, Russia, France, Japan, and China – capable of manned deep sea exploration.
Two years later, the Offshore Areas Mineral (Development and Regulation) Act, 2002, was amended to allow for auction as the method of allocating operating rights in offshore areas for development and regulation of mineral resources.
In 2024, the Centre introduced Offshore Areas Mineral Trust Rules, the first-ever framework to boost mineral exploration and production in India’s offshore areas. The holders of production leases are required to contribute to the trust’s initiatives by paying 10 per cent of their royalty payments to the government.
To make offshore mining more viable, the new rules allow lessees to surrender their entire lease area after 10 years if production operations are not found to be economical.
The Union Budget for 2024-25 also underscored India’s commitment to accelerating its electric mobility transition and advancing its net zero commitments with uninterrupted supply of low-cost clean energy technologies (CETs) through Critical Mineral Mission. The stress is on domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets as the heavy reliance on their imports poses significant economic and strategic risks.
Bridging The Demand-Supply Gap
The first-ever auction of offshore critical mineral blocks would bolster the country’s mineral wealth and reduce dependence on imports while stabilising the supply chains. This assumes significance amid a shift towards technologies reliant on high-demand critical minerals, which includes manufacturing advanced batteries for storage and transportation, semiconductors, wind turbines, solar panels, and other clean energy solutions.
The mining industry has the potential to significantly impact GDP growth, foreign exchange earnings, and give end-use industries like building, infrastructure, automotive, and electricity, among others, a competitive edge.
Through offshoring mining, India also looks to disrupt the growing reach of China, exporting 60-70 per cent of critical minerals to the world, critical to a wide range of products that will shape the future. The intent is to cash in on an opportunity to build refining and processing capabilities and emerge as a global value-adding hub while meeting the needs of the growing domestic clean energy equipment manufacturing sector.
According to a report published by the Institute for Energy Economics and Financial Analysis (IEEFA), India’s demand for critical minerals is expected to more than double by 2030 while fulfilling its commitment to achieve 500 gigawatts (GW) of non-fossil fuel-based electricity installed capacity. The country’s current renewable energy installed capacity is 201 GW, with solar energy accounting for 91 GW.
Availability of critical minerals is also essential for expanding its wind energy capacity from the current 42 GW to 140 GW by 2030. It ships in lithium, cobalt and nickel used in lithium-ion batteries that power EVs. Similarly, 95 per cent of India’s copper requirements are met through imports. It is used in renewable energy systems to generate power from solar, hydro, thermal and wind energy.
The domestic mining operations, however, may take over a decade to start producing.
Lack of exploration and a weak focus on mining has seen India’s import bill touch USD 8.01 billion (for all minerals excluding fuel/coal, gold/diamond and other minor minerals) in 2023-24 from USD 3.03 billion in 2020-21.
According to a new study by the Centre for Social and Economic Progress (CSEP), India will need approximately 58 tonnes of lithium, 17 tonnes of cobalt, 52 tonnes of nickel, and 609 tonnes of graphite in 2025 for manufacturing clean energy devices and electric vehicle (EV) batteries. The requirements are projected to surge by 2047 with demand for lithium at 20,845 tonnes, cobalt at 5,914 tonnes, nickel at 18,599 tonnes, and graphite at 2,17,884 tonnes.
Besides offshore mining, India is also in active discussion with countries, including Australia, Russia, Argentina, Chile, Zambia, and Mongolia, for potential acquisition of critical mineral assets. It has signed a Memorandum of Understanding (MoU) with Australia to jointly explore and develop lithium and cobalt resources.
Giving further fillip to Atmanirbhar Bharat, a joint venture company – Khanij Bidesh India Ltd (KABIL), comprising National Aluminium Company Limited (NALCO), Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Limited (MECL), has been mandated to identify, explore, acquire, develop, mine, process, procure and sell strategic minerals such as lithium, cobalt, and rare earth elements abroad to secure resilient supply of these minerals to domestic industry.
Investing in overseas mining projects will allow India to gain direct access to mineral resources and reduce the risks associated with fluctuating global markets and supply disruptions.
Meanwhile in Other Countries
China, Japan, Norway, Brazil, South Africa, Papua New Guinea, Chile, Namibia are among the major countries pursuing offshore mining with nearly two dozen companies currently holding exploration contracts.
Japan has claimed to have completed multiple small-scale mining tests in its EEZ. The island nation is exploring three types of deep-sea mineral deposits – polymetallic sulphides, cobalt-rich crusts and rare-earth mud. The harvester testing is expected in 2025, with production as early as 2026.
The Cook Islands has the world’s largest documented collection of mineral rich manganese nodules, estimated at a staggering 6.7 billion tonnes. While exploration contracts were issued to three companies in 2022, commercial production is expected to start there by 2028.
Amid this global race to explore and exploit the deep seabed littered with rich deposits of metals for energy security, 31 countries have called for some form of a ban, moratorium or pause on deep sea mining in international waters until its impacts on the ocean, climate and biodiversity are properly investigated.
This stark environmental opposition also forced Norway to shelve its plans to open a vast ocean area at the bottom of the Arctic for commercial-scale deep-sea mining earlier this month. It was the first country in the world to move forward with commercial-scale deep-sea mining and approved the plans in January.
The Australian state of New South Wales, the south Pacific islands of New Caledonia and several US states and territories have voted to ban the practice in their own domestic waters.
Automakers BMW, Renault, Volkswagen, Volvo and Scania have also joined this groundswell, supporting a moratorium on deep-sea minerals in their supply chains. Shareholders of General Motors and Tesla, however, have voted against proposals to agree to a moratorium on sourcing deep-sea minerals for their EV battery systems.
Looking Forward
India’s exploratory mission in a frontier that remains largely uncharted has come at a time of high resistance due to unknown ecological effects. Although deep sea mining holds immense potential for scientific and economic benefits, critics are of the opinion that extracting minerals from the ocean floor could cause significant disturbances to the marine ecosystem and disrupt migratory routes.
Accordingly, scientists at National Institute of Ocean Technology (NIOT) are working on efficient yet environment-friendly technology. The focus is already on minimising the interaction on the seabed during the tests of pre-pilot mining systems. A complete system is being designed for collecting nodules, sizing and pumping them up to the surface. The plan includes disposing the separated water responsibly with minimal impact on the environment, adhering to the global standards.
Experts believe that India is headed in the right direction.
