The clean energy transition is not being won by technology alone but by control over minerals and their processing. While lithium, cobalt and rare earths dominate climate narratives, the real power lies in midstream capacity—refining, conversion and chemical processing. China’s decades-long dominance in this invisible layer has rewritten global supply chains, exposing strategic vulnerabilities for the West and India alike.
DR. AMIT DUA ASSOCIATE PROFESSOR | COMPUTER SCIENCE & INFORMATION SYSTEMS DEPARTMENT | BITS PILANI | FOR NEWS ANALYTICS
5 mins read.
The public discussion about clean energy focuses mainly on technological advancements, but the actual barrier exists in geological resources and processing facilities, which decide who can construct the essential infrastructure of future energy systems. A limited group of minerals, including lithium, cobalt, nickel, graphite and rare earths, has transitioned from their previous industrial usage to become central elements in worldwide strategic planning.
The world believed that supply would automatically increase as EVs and renewables gained popularity. This assumption proved incorrect. Clean energy production depends on fragile supply networks, which operate under political risk and show uneven distribution patterns. The strategic advantage exists in locations that most people fail to recognise. The ability to control mineral resources depends on processing capabilities rather than mining operations. Resource maps present misleading information to users. The presence of minerals in geological formations does not grant control over resources. The ability to transform minerals into battery-grade materials determines who will gain control of the market. China established an unmatched position in the market through its development of processing facilities. The country controls 60–70% of worldwide lithium chemical production and 75% of cobalt processing, and all spherical graphite used in EV anodes. It also controls all rare-earth separation and magnet manufacturing operations.
The development of these capabilities spanned multiple decades. It required ongoing industrial support, environmental flexibility, substantial financial backing and specialised technical personnel. China started its development efforts before other nations did. Mining nations maintain physical control of their mineral reserves, but China maintains dominance in the processing operations that transform minerals into marketable products.
The West has launched its late-stage effort to develop its resources. The United States, Europe and Japan established their awareness of this vulnerability during the previous few years. The US government established the Minerals Security Partnership following the passage of the Inflation Reduction Act in 2022. The EU introduced its Critical Raw Materials Act in 2023. Japan started funding overseas refining operations and building up stockpiles of materials.
The political value of these actions remains significant, but industrial development requires immediate action because time works against us. The construction of new lithium refineries and rare-earth separation facilities requires five to ten years of development time before obtaining necessary environmental clearances. The Western world faces an impossible task to reduce its 20-year supply deficit into a single funding period because economic incentives lack the power to speed up engineering development.
Minerals do not create power—processing does. Whoever controls midstream controls the clean energy future.
The main problem lies in the concentrated nature of mineral resources rather than their actual scarcity. Multiple countries across the world possess lithium deposits. The same situation applies to cobalt and rare earth elements. The main reason for vulnerability stems from the fact that extraction and processing operations have become highly concentrated. The Democratic Republic of Congo produces approximately 70% of the worldwide cobalt supply through operations that Chinese companies operate. China operates more than 90% of the global production facilities for anode-grade graphite processing. China maintains complete control over rare-earth separation operations. The Indonesian government implemented aggressive export policies, which transformed the global nickel market.
The system becomes extremely sensitive because of its concentrated nature. The EV market experiences rapid disruptions within weeks when regulatory changes, port disruptions or diplomatic conflicts occur. The actual level of system instability remains high even though minerals exist in abundant quantities throughout the world.
Resource nationalism has replaced free markets as the real driver of the critical minerals economy.
Resource nationalism has already shaped the transition through governmental actions. These essential materials have become strategic assets that governments now use to achieve their objectives. China demonstrated its ability to use graphite exports as a geopolitical tool through its 2023 export restrictions. The Indonesian government implemented a nickel export ban, which forced manufacturers to establish their operations within the country, thus transforming global supply patterns. State control over mineral resources has become a recurring pattern throughout Latin America and Africa as countries implement new royalty systems.
The mineral market now operates under state control instead of market-based pricing mechanisms. The current situation demonstrates how political factors will interact with climate change initiatives. India depends on foreign imports to support its green energy development plans. India plans to establish itself as a leading manufacturer of EVs, batteries and renewable energy systems. The country depends on foreign sources for all its lithium chemical imports, as well as cobalt and nickel sulphates and battery-grade graphite. The production of copper smelting depends heavily on imported concentrates.
The current supply situation creates an unavoidable condition that demands action. The upcoming ACC gigafactories need battery-grade lithium materials starting from the late 2020s, yet India lacks operational conversion facilities. The production of advanced cathode materials requires nickel and cobalt precursors, which all come from foreign processing facilities. The lack of external control over supply resources will create ongoing market instability for Indian manufacturing operations.
THE J&K LITHIUM FIND
The discovery of 5.9 million tonnes of inferred lithium resources in Jammu & Kashmir brought optimism about achieving domestic self-sufficiency. The geological classification of “inferred” serves as an initial assessment point instead of a solution for supply needs. The process of transforming this deposit into an operating mine needs multiple years of drilling work, feasibility assessments, environmental approvals and infrastructure construction.
The Indian market for battery materials will reach its peak before the current decade ends. The development of domestic supply will become important, but it will not support the construction of new manufacturing facilities at present.
India has started to expand its operations because of the identified supply gap. The Indian mining vehicle KABIL operates abroad to acquire lithium assets in Argentina while it seeks business alliances in Australia and Africa. The company needs to establish relationships with foreign suppliers to achieve supply chain diversification.
The acquisition of foreign assets creates fresh risks because governments can change policies, elections can trigger regulatory changes and royalty rate fluctuations, and local communities may oppose operations. The changing lithium regulations in Latin America and unstable investment environments in Africa demonstrate how overseas assets create new risks for businesses. The practice of risk distribution through diversification does not make risks disappear.
Without midstream control, India risks becoming a permanent consumer in the green economy, not a rule-maker.
INDIA’S MISSING MIDDLE
The most critical structural problem in India exists in the middle segment of its supply chain. The lack of domestic lithium conversion facilities prevents India from producing nickel and cobalt sulphates and anode and cathode precursor materials, which makes gigafactories dependent on imported chemicals. The ability to convert raw materials into usable inputs becomes essential even when overseas mines provide secure access to resources.
This supply chain segment requires substantial capital investment and complex technical expertise to generate strategic power. The early investments China made in midstream processing operations created its current market leadership position beyond its mineral resource size. The current supply chain operations do not link up with the new policies that India has established.
India has developed an encouraging set of policies which include a defined list of 30 critical minerals, centralised auctions, expanded GSI exploration and the PLI-ACC scheme for battery manufacturing. Each initiative is valuable. However, the development of new projects faces inconsistent progress. The exploration process advances at a fast pace, yet conversion facilities face challenges in securing funding. The manufacturing sector receives financial benefits but depends on materials that India lacks the ability to produce. The development of separate capabilities will continue when the mining sector does not operate in sync with processing and manufacturing activities.
A DIFFICULT TRUTH
Many people hold the false belief that the energy transition can proceed with minimal new extraction and minimal environmental impact. Current market projections indicate that new extraction activities will become necessary. The worldwide lithium market will experience more than fourfold growth during the next ten years. Market demand for nickel, cobalt and graphite will experience similar growth patterns. The process of recycling will start to produce meaningful amounts of materials, but this will not happen until the mid-2030s.
The avoidance of mining development will transfer environmental impacts to other nations across the world. The actual decision involves choosing between controlled extraction operations under proper governance and unregulated resource extraction methods. The upcoming decade will establish market leadership through control of processing and refinement operations rather than mineral ownership. The ability to influence prices, secure supply, and advance battery and magnet technology development depends on midstream capacity.
The strategic frontier for India exists in this specific area. The development of chemical and metallurgical capabilities between mines and batteries will determine the value of overseas assets, domestic exploration and manufacturing incentives for India. The countries that achieve success in this sector will establish the rules for the green transition. Other nations will need to negotiate for access to these resources.
India maintains opportunities to influence its position in the market. The window of opportunity for India to shape its position continues to shrink because multiple nations now compete to establish their processing and refining operations within their borders. Strategic discipline combined with industrial policy coordination, specific funding and extended infrastructure development will determine whether India establishes itself as a supply chain stabiliser or remains a large consumer without influence. The energy transition will reward organisations that achieve mastery of the midstream sector. The real battle for future dominance will take place at the midstream level instead of in distant mineral reserves.
(Dr Amit Dua is an Associate Professor at BITS, Pilani. He is a TEDx speaker and the author of books on Machine Learning and Machine Learning for Education. The views expressed are of the author and do not necessarily reflect the views of The News Analytics Herald.)
Quick Insights
- Clean energy dominance depends on mineral processing, not just mining or technology leadership.
- China controls most global midstream capacity for lithium, cobalt, graphite and rare earths.
- Resource nationalism is reshaping mineral markets through export bans and state intervention.
- India remains critically dependent on foreign processing for batteries and renewable manufacturing.
- Midstream investment will determine future supply security, pricing power and strategic autonomy.
