Foreign Policy Watch: India-Pakistan

Minerals Security Partnership Finance Network (MSFN)

IOCR | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Minerals Security Partnership Finance Network (MSFN)

Why in the News?

India has officially joined the US-led Minerals Security Finance Network (MSFN), a global initiative to strengthen cooperation in securing critical mineral supply chains.

What is the Minerals Security Finance Network (MSFN)?

  • The MSFN is an initiative emerging from the Minerals Security Partnership (MSP), established by the US in 2022.
  • It aims to promote cooperation, information exchange, and co-financing among countries.
  • It brings together development finance institutions (DFIs) and export credit agencies (ECAs) from partner nations to facilitate investments in critical mineral supply chains.
  • It seeks to meet the increasing global demand for critical minerals and reduce dependence on dominant suppliers like China.

About Minerals Security Partnership (MSP):

Details
Established 2022, by the United States
Objective To ensure a stable, diversified, and secure supply of critical minerals essential for the global clean energy transition.
Members 13 countries and the European Commission, including:
United States, Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Republic of Korea, Norway, Sweden, and the European Union.
Focus Areas • Securing critical minerals such as lithium, cobalt, nickel, and rare earth elements.
• Reducing dependency on dominant suppliers like China.
• Promoting cooperation between development finance institutions (DFIs) and export credit agencies (ECAs) to finance critical mineral projects.
Significance for India • India joined in June 2023, aiming to secure minerals for its growing electric vehicle (EV) and electronics sectors.
• India seeks to diversify its supply sources from Argentina, Chile, Australia, and Africa.

Significance of Critical Minerals

  • Critical minerals are elements essential for the manufacturing of renewable energy technologies, such as electric vehicle (EV) batteries, solar panels, wind turbines, and semiconductors.
  • Some of the most important critical minerals include:
    • Lithium: Essential for EV batteries.
    • Cobalt: Used in batteries and electronics.
    • Nickel: Key for battery manufacturing.
    • Rare earth elements (REEs): Used in semiconductors, high-tech electronics, and military applications.
  • The global demand for these minerals is rapidly rising as countries aim to shift away from fossil fuels to renewable energy sources.
  • China is currently the world leader in both the mining and processing of many of these critical minerals, creating concerns about the concentration and resilience of supply chains.
  • Securing a reliable, diversified supply of critical minerals is essential for nations looking to achieve their clean energy goals and ensure economic stability in high-tech sectors.

PYQ:

[2012] Recently, there has been a concern over the short supply of a group of elements called ‘rare earth metals’. Why?

  1. China, which is the largest producer of these elements, has imposed some restrictions on their export.
  2. Other than China, Australia, Canada and Chile, these elements are not found in any country.
  3. Rare earth metals are essential for the manufacture of various kinds of electronic items and there is a growing demand for these elements.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

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