Chips Need Minerals, Too

  • November 07, 2025
  • Economy

The Statesman

Chips Need Minerals, Too

 

1) Introduction and Context

The editorial examines India’s bid to build a domestic semiconductor ecosystem and argues that success hinges on critical mineral security—notably silicon inputs and rare earth elements (REEs) used across chipmaking and advanced electronics. Placed against the backdrop of PLI/Semicon India, tight global supply chains, and China’s dominance in mineral refining, the piece frames mineral sovereignty as a strategic prerequisite for India’s tech ambitions.

2) Key Arguments

a) Semiconductor push vs. mineral dependence

  • Investments under Semicon India are rising (AP, Odisha, Gujarat), yet India remains dependent on imports of critical minerals/materials.
  • China controls ≈90% REE processing and ~70% of semiconductor-related materials—a structural chokepoint.

b) Rare earths as the missing link

  • REEs (e.g., Nd, Dy, Tb) are indispensable for high-end electronics and chip ecosystem equipment.
  • India’s domestic REE output (via IREL) is limited; refining and separation tech and environmental systems lag demand.

c) China’s dominance & externalities

  • Early state-backed bets, scale, subsidies, and tolerance of environmental costs entrenched China’s lead.
  • High waste/contamination risks deterred other countries from scaling refining.

d) India’s potential, present bottlenecks

  • Reserves across AP, TN, Kerala, Jharkhand exist; output (∼5–7k t/yr) far below potential.
  • Needs: PPPs, global partnerships, process tech, and sustainable standards.

e) Global trends & the way forward

  • Resource nationalism is rising; US/Japan diversify via alliances & R&D.
  • India should adopt a National Critical Minerals Strategy spanning exploration → refining → recycling (circularity).

3) Author’s Stance

Pragmatic–strategic. The authors back India’s chip drive but warn that manufacturing without mineral self-reliance recreates today’s vulnerabilities. Tone: analytic, cautionary, forward-looking, stressing sustainability + sovereignty.

4) Biases Present

  • Techno-nationalist tilt: Sovereignty lens may underweight local social–environmental costs.
  • Underplayed ecological risk: Extraction/refining impacts likely larger than acknowledged.
  • Industry-centric framing: Community rights/rehabilitation get less space.
  • Optimism on state capacity: Assumes rapid scale-up despite coordination/bureaucratic frictions.

5) Pros and Cons

Pros

  • Timely linkage between chips and minerals; strategic clarity.
  • Uses salient facts on China’s processing dominance; action-oriented (alliances, circularity).
  • Situates India in global supply-chain geopolitics.

Cons

  • Limited dive into National Mineral Policy (2019) / Critical Minerals list (2023) execution.
  • Sparse treatment of social–environmental safeguards and FPIC.
  • Little fiscal/scale economics of REE infrastructure.
  • Underplays urban mining/e-waste recovery innovation potential.

6) Policy Implications

Strategic Mineral Policy

  • Launch a National Critical Minerals Strategy/Mission with targets for exploration, separation tech, and refining capacity.
  • Clear, stable regulation for FDI/PPP with technology transfer clauses.

PPP & Clusters

  • Build mineral processing clusters (coastal/logistics-advantaged), anchored by IREL + global JV partners.
  • Create viability-gap funding and standardized ESG tendering.

Sustainability & Circularity

  • Codify ESG, FPIC, rehabilitation, and real-time environmental monitoring.
  • Scale e-waste mining (rare earth recovery from magnets, catalysts, batteries) with producer responsibility.

Geopolitics & Alliances

  • Deepen ties with MSP countries (US/EU/Japan/Australia); MOUs for offtake + tech sharing.
  • Diversify sourcing from Vietnam, Africa, Latin America.

Skills & R&D

  • Fund centres of excellence in metallurgy/solvent extraction/ion-exchange; doctoral chairs; fab-equipment materials research.
  • Link IITs/CSIR with industry via grand challenges on REE separation and magnet manufacturing.

7) Real-World Impact

Economic: Mineral security unlocks semis, renewables (wind/EV), defense, improving value-addition and jobs.
Strategic: Reduces China exposure, raises India’s leverage in resilient supply chains.
Environmental: Without strong safeguards, risk of radioactive/by-product pollution and biodiversity loss.
Social: Requires consent, compensation, and livelihood plans to avoid conflict in tribal/coastal belts.

8) UPSC Alignment

  • GS-1 (Geography & Society): Mineral distribution; resource regions & communities.
  • GS-2 (IR & Governance): Strategic resource diplomacy; regulatory architecture; FPIC.
  • GS-3 (Economy/Tech/Environment): Industrial policy, semiconductors, circular economy, e-waste, ESG.
  • GS-4 (Ethics): Intergenerational equity; environmental justice in extraction.

9) Conclusion

India’s semiconductor aspirations rest on mineral foundations. The editorial convincingly argues that fabs without feedstock security are fragile. The durable path blends extraction + refining capacity with circular recovery, ethical governance, and ally-driven diversification. Self-reliance must be efficient and ethical—or it will trade dependence on one bottleneck for another.

10) Future Perspectives

National Critical Minerals Mission integrated with Semicon India/PLI; time-bound capacity targets.

Urban-mining accelerators for REE recovery from motors, HDDs, EV batteries; green-credit incentives.

Traceable “Green Mining” via satellite/IoT ledgers; public dashboards on compliance and tailings.

Allied Tech Partnerships: Pilot REE separation JVs; magnets & CMP slurries/domestic specialty gases.

“Minerals for Democracy” diplomacy: Brand India as a reliable, responsible supplier in friend-shored chains.