The Union Cabinet approved a Rs 1,500-crore incentive scheme to develop recycling capacity in the country for the separation and production of critical minerals from secondary sources on September 3.

Highlights of the scheme:

• This scheme is part of the National Critical Mineral Mission (NCMM), which is aimed at building the domestic capacity of and supply chain resilience in critical minerals. 

• The critical mineral value chain comprising exploration, auction and mine operationalisation, and acquisition of foreign assets, has a gestation period before they could supply critical minerals to Indian industry. 

• A prudent way to ensure supply chain sustainability in the near term is through the recycling of secondary sources.

• The scheme will have a tenure of six years from FY 2025-26 to FY 2030-31. 

• Eligible feedstock is e-waste, Lithium Ion Battery (LIB) scrap, and scrap other than e-waste & LIB scrap e.g. catalytic converters in end-of-life vehicles. 

• Expected beneficiaries will be both large, established recyclers, as well as small, new recyclers (including startups), for whom one-third of the scheme outlay has been earmarked. 

• The scheme will be applicable to investments in new units as well as expansion of capacity / modernisation and diversification of existing units. 

• The scheme will provide incentive for the recycling value chain which is involved in actual extraction of critical minerals, and not the value chain involved in only black mass production.

• In terms of key outcomes, the scheme incentives are expected to develop at least 270 kilo tonnes of annual recycling capacity resulting in around 40 kilo tonnes annual critical mineral production, resulting in about Rs 8,000 crore of investment and job creation — both direct and indirect — of close to 70,000.

What are critical minerals?

• One definition suggests that a mineral is labelled as critical when the risk of supply shortage and associated impact on the economy is higher than the other raw materials. 

• They are metals, non-metals and minerals that are considered vital for the economic well-being of the world’s major and emerging economies, yet whose supply may be at risk due to geological scarcity, geopolitical issues, trade policy or other factors.

• Critical minerals are essential for economic development and national security. The lack of availability of these minerals or even concentration of existence, extraction or processing of these minerals in few geographical locations may lead to supply chain vulnerability and disruption.

• The future global economy will be underpinned by technologies that depend on minerals such as lithium, graphite, cobalt, titanium, and rare earth elements (REE). 

• Each country has its own classification of raw materials or critical minerals depending on levels of economic development, industry requirements, national interests and security concerns, technology, market changes and natural resource endowment. 

• The most common framework widely adopted for evaluating material criticality is based on a metal’s supply risk and the impact of a supply restriction. 

• Critical minerals include rare earth elements (REEs) and platinum-group elements.

National Critical Mineral Mission

• There is a need to establish an effective framework for India’s self-reliance in the critical mineral sector. 

• In line with this vision, Finance Minister Nirmala Sitharaman announced the setting up of the Critical Mineral Mission in the Union Budget for 2024-25.

• In January 2025, the Union Cabinet has approved the launch of the National Critical Mineral Mission (NCMM) with a total outlay of Rs 34,300 crore spread over seven years.

• The NCMM will encompass all stages of the value chain, including mineral exploration, mining, beneficiation, processing, and recovery from end-of-life products.

• The mission will intensify the exploration of critical minerals within the country and in its offshore areas.

• It aims to create a fast-track regulatory approval process for critical mineral mining projects. 

• Additionally, the mission will offer financial incentives for critical mineral exploration and promote the recovery of these resources from overburden and tailings.

• The mission aims to encourage Indian public sector enterprises and private sector companies to acquire critical mineral assets abroad and enhance trade with resource-rich countries. 

• It also proposes development of a stockpile of critical minerals within the country.

• The mission includes provisions for setting up of mineral processing parks and supporting the recycling of critical minerals. It will also promote research in critical mineral technologies and proposes setting up a Centre of Excellence on Critical Minerals.

• Adopting a whole-of-government approach, the mission will work closely with relevant ministries, PSUs, private companies, and research institutions to achieve its objectives.