China's recent approval of a new framework for mineral resources is causing unease among Indian importers. The regulations, set to take effect on June 15, 2026, were approved by Chinese Premier Li Qiang and are tied to national security objectives, according to the Economic Times.
Impact on Global Supply Chains
The new policy formalizes China's dominance in the critical mineral processing value chain, where it controls 90% of the global processing capacity. Manas Majumdar, partner-lead energy & resources at PwC India, noted that while the policy aims to stabilize the supply chain and avoid price shocks, it also strengthens China's control over supply to other countries, including India.
- Transparency and Accountability: The policy is presented as a measure to enhance transparency and environmental accountability.
- Political and Commercial Leverage: Anurag Singh, managing director at Primus Partners, highlighted that the framework equips China with tools to derive political and commercial advantages from its dominant position.
Risks for Importers
K Srikumar, senior vice-president at ICRA Ltd, warned that China's decision to secure supplies could restrict availability across the value chain, leading to increased price volatility and supply shortages. This poses risks for downstream players, particularly in the automotive and electronics sectors.
"These measures may shift the balance of power further toward Chinese suppliers relative to customers worldwide," Singh added.
Strategic Responses
Indian importers are considering building strategic inventory reserves to manage the near-term impact. However, Srikumar noted that medium-term dependence on China would continue due to inadequate non-China capacities.
| Aspect | Impact |
|---|---|
| Supply Chain Control | Strengthened by China |
| Price Volatility | Likely to Increase |
| Importer Strategy | Building Inventory Reserves |
Conclusion
The new framework underscores China's strategic approach to mineral resources, potentially reshaping global supply dynamics. Importers and trade professionals must closely monitor these developments to mitigate risks associated with supply chain disruptions and price fluctuations.
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