India-Kazakhstan cooperation in critical minerals signals a changing regional approach

The critical minerals sector has attracted significant global attention, including from New Delhi and Astana. On November 4, India and Kazakhstan collaborated to produce titanium slag, a crucial mineral. Indian Rare Earths Limited (IREL) and Kazakh Ust-Kamenogorsk Titanium and Magnesium Plant (UKTMP) have signed an agreement agreement to set up an Indo-Kazakh joint venture (JVC), IREUK Titanium Limited, which will process low-grade Ilmenite reserves in Odisha into high-quality titanium raw material. UKTMP would not only supply the technology and capital investment, but also purchase agreed quantities of titanium.

This initiative aims to develop the titanium value chain in India. According to the official press release, the scheme “will play an important role in generating valuable currency for [India] and UKTMP JSC to help secure raw materials.” By combining the strengths of both parties, the joint venture is expected to enhance the brand equity of both companies while serving as a hub for India and Kazakhstan in the titanium value chain, in line with the broader strategic objectives of both parties in securing critical mineral supply chains. .

The new titanium deal between India and Kazakhstan reflects three key aspects. First, the agreement represents a positive but incremental development in India’s long-term goal of developing a critical mineral supply chain and way to compensate for previous mistakes. India’s attempts to auction mining rights for crucial minerals have drawn lackluster responses in the past. Given the costly extraction process, Indian investors are reluctant to invest due to outdated official rules for the classification of raw materials, which lack the necessary information about the economic viability of mining a block. The Ministry of Mines (MOM), with failed several times to receive a minimum of three required domestic bidders and has had to cancel the auctioned mineral blocks. In the third tranche of auctions, for example, MOM declared null and void three of the total of seven auctioned blocks – including the block containing titanium.

Consequently, the Kazakhstan deal will be a key element in India’s approach leveraging foreign technology and capital to develop a critical mineral supply chain. This agreement is crucial, given the application of titanium in key sectors and gaps in India’s supply chain. Thanks to the lack of India’s extraction, processing and recycling technologies leave the country excessively dependent on imports. India has done so specifically in the area of ​​processing significant processing capabilities for only one designated critical mineral, copper. For all other countries it is dependent on external suppliers for the purchase of refined minerals.

Second, the deal is also a reflection of fundamental political-economic changes that Kazakhstan and the Central Asian region are witnessing. With growth of more than 5 percent over the past decade, the region has made significant progress in upskilling the workforce and improving production capabilities, while pursuing sustainable economic growth.

Unlike in the past when Indian power companies such as ONGC Videsh Ltd (OVL) bought shares to explore and exploit Kazakhstan’s oil field, today’s reality is different. UKTMP, which sells 100 percent of its titanium products to developed countries, is a testament to the tremendous technological advances Kazakhstan has achieved. A growth of more than 4 percent has been achieved since 2017with the exception of the pandemic year, Astana has accepted a market-driven innovation ecosystem, which has provided regional science, technology and innovation leadership and competitiveness in a rapidly evolving global technological landscape. The country’s economic growth trajectory appears rosy central bank forecasts an average growth rate of 4.5 percent over a five-year horizon.

Third, the deal could mean a greater focus in the Southern Bloc promoting India’s ties with Kazakhstan and possibly the Central Asian region – a global mineral powerhouse. In addition to oil and uranium, Astana has vast reserves of crucial minerals and rare earth elements, including cadmium and rheniumwhich is considered crucial by India.

Kazakhstan’s importance to India goes beyond its possession of mineral resources, as Astana belongs to New Delhi largest trading partner in Central Asia. Recent talks between the two sides have emphasized greater business-to-business relationships and leveraging complementarities, especially in the electronics and technical goods sectors. Bilateral trade, in total $1 billion offers enormous opportunities for growth in a range of sectors by 2023, including energy, renewable energy, pharmaceuticals and agriculture.

The potential of India’s ties with Central Asia remains unfulfilled. Despite his attempts to pursue deeper strategic involvement, New Delhi’s ties with the region are limited. India’s traditional policy objective of achieving physical connectivity through projects such as the International North-South Transport Corridor (INSTC) and Chabahar Port has remained elusive for two decades.

There seems to be a feeling in New Delhi that previous assumptions about the region – that Central Asian countries are the main beneficiaries of bilateral engagement – ​​are no longer valid. Today it is a new Central Asia, with its economies witnessing strong growth rates from inner orientation to liberalizationtogether with market diversification. There is also a greater regional push for diversification of international partners. In the midst of renewed great power competition involving the United States, China and the European Union, India’s renewed regional interest, underlined by the recent deal in the titanium sector, is emblematic of Central Asia’s increased strategic utility.

While India understandably cannot make large-scale infrastructure investments on the same scale as China, New Delhi is likely to benefit from the new opportunities for involvement in the region as a result of the war between Russia and Ukraine. With complementarities for regional engagement in sectors such as mining, green energy, medical tourism and education, and digital technologies, India’s efforts to become a viable alternative partner for Central Asian countries are likely to continue. This is evident from a recent one Ten-year agreement with Iran for making Chabahar port operational and negotiations for a free trade agreement (FTA) with the Eurasian Economic Union (EAEU).

On critical minerals in particular, despite its partnerships with countries like the United States, Australia and France, India is likely to explore further cooperation with Kazakhstan and possibly other Central Asian states. As securing the supply chain of critical minerals across the spectrum, from exploration to recycling, remains a long-term and complex goal, the merrier seems to be the mantra for the future.

Therefore, India’s perception shift and its interest in becoming a major regional player, despite the multifaceted barriers to substantive engagement, would push New Delhi to pursue deeper economic engagement in Central Asia.