world · 2026-06-20
India Eyes Uzbekistan for Critical Minerals
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India identified critical minerals supply as a priority area for deeper energy cooperation with UzbekistanThe push aims to reduce India's dependence on China, which controls ~60% of global critical mineral processingUzbekistan holds significant reserves of uranium, tungsten, and rare earths, making it a strategic sourcing partner
Why does India need Uzbekistan's minerals?
India imports ~90% of its lithium and rare earths, mostly processed through China. Uzbekistan has large reserves of uranium, tungsten, copper, and rare earths. Securing direct supply lines bypasses Chinese processing bottlenecks. KABIL, India's joint venture for mineral sourcing, has already explored deals in Australia and Argentina.
What minerals does Uzbekistan have?
Uzbekistan ranks among the top 10 global producers of uranium and gold. It also holds significant tungsten, copper, and molybdenum reserves. Its Navoi Mining and Metallurgy Combinat is Central Asia's largest mining operation, producing ~3.5K tonnes of uranium annually.
Why can't India mine these domestically?
India has some rare earth deposits in Odisha and Kerala, but extraction is limited by environmental clearances and low processing capacity. For lithium, India discovered reserves in Jammu & Kashmir's Reasi district in 2023, but commercial extraction is years away. Current domestic output meets less than 5% of demand.
How do these supply deals typically work?
Typically structured as long-term offtake agreements, where India commits to buying fixed quantities at pre-agreed prices. KABIL's deal with Argentina's state mining company CAMYEN for lithium is one model. Govt-to-govt frameworks reduce political risk compared to purely commercial contracts.
How does this shift India's China dependence?
China controls ~60% of global critical mineral processing. If India sources raw minerals from Uzbekistan, it still needs domestic refining capacity to avoid rerouting through China. Companies like Tata Chemicals and NALCO are building processing facilities. Diversifying sources across Uzbekistan, Australia, and Chile reduces single-country risk.
Does this change EV battery costs in India?
Not immediately. Battery-grade lithium and cobalt require multiple processing steps after mining. Securing raw supply is step one. Tata Motors and Ola Electric still source cells from Chinese and Korean suppliers. Cost impact depends on India building refining capacity, which KABIL estimates will take until ~2028.
Which Indian firms benefit most?
State-owned NALCO and Hindustan Copper are positioned for upstream processing. Private players like Tata Chemicals are investing in lithium refining. Battery makers like Amara Raja and Exide could benefit from diversified supply chains reducing input cost volatility over 3 to 5 years.
What if China retaliates on mineral exports?
China restricted gallium and germanium exports in 2023 as a warning shot. If tensions escalate, India's ~90% processing dependence on China becomes a chokepoint. The Uzbekistan corridor, combined with Australia and Chile sourcing, builds redundancy. India's mineral stockpiling policy, announced in 2024, provides a 6-month buffer.
What rules govern India's mineral sourcing?
India's 2023 critical minerals strategy identified 30 minerals as essential. The govt amended mining laws to allow private and foreign participation in critical mineral extraction. KABIL signed agreements with Argentina and Australia. The Uzbekistan push adds a Central Asian corridor, with bilateral investment treaties providing legal frameworks for long-term supply contracts.
What specific policy changes enable this?
India amended the Mines and Minerals Act in 2023 to add 24 critical minerals to auction blocks. The govt also allowed 100% FDI in mining and granted exploration licenses to private firms. Bilateral investment treaties with Uzbekistan provide dispute resolution mechanisms that protect Indian companies investing there.
How does this compare to US mineral deals?
The US signed a critical minerals MOU with Uzbekistan in 2023 as well, creating competition. Washington's Inflation Reduction Act requires US-allied mineral sourcing for EV subsidies, pulling Uzbek supply westward. India's advantage is geographic proximity and lower shipping costs via the International North-South Transport Corridor.
Does India have leverage in negotiations?
India offers Uzbekistan a large downstream market for processed minerals, plus infrastructure investment. India's pharmaceutical and IT sectors are already present in Uzbekistan. Bilateral trade was ~$1Bn in 2024. India can offer refinery construction expertise through companies like L&T, creating mutual dependency rather than one-sided extraction.
Source: livemint.com