Daily News Analysis 7 April 2023

                                 Table of Contents

GS-2

• Why is Japan circumventing sanctions on Russian oil?

Facts for Prelims

• Mining of Rare Earth Elements
• India Justice Report 2022
• MISHTI scheme

Why is Japan circumventing sanctions on Russian oil?

Context

Japan has been purchasing oil from Russia at a price above the $60 per barrel price cap imposed by the West, according to reports this week. This has led to speculation that Japan may be breaching an agreement reached last year to cap the price of Russian oil.

Why is there a price cap on Russian oil?

• The G-7 countries, the EU, and Australia have imposed a $60 per barrel price cap on oil purchased from Russia starting in December.
• The move is part of the wider economic sanctions imposed by the West to punish Russia following its invasion of Ukraine.
• The West wants to restrict the amount of money that Russia can make by selling its oil, but without severely affecting global oil supply.
• Russia contributes about 10% of global oil supply, and any significant reduction in Russian oil supplies could send oil prices soaring.
• The West believes that, at $60 per barrel, Russia would still keep its oil output steady since it costs Russia about $20-$45 to produce a barrel of oil.

Why is Japan breaking ranks with the West?

• Japan purchased 750,000 barrels of oil from Russia at $70 per barrel in the first two months of the year.
• Japan\’s oil import has a negligible impact on Russia\’s overall oil production of 10.7 million barrels per day, and thus does not undermine the West\’s efforts to limit the Kremlin\’s oil revenues.
• Japan\’s decision to buy oil above the $60 per barrel price cap once again highlights the strong incentives for countries to circumvent the cap.
• Japan had previously obtained an exception to buy Russian oil from Sakhalin-2 in Russia\’s Far East when the price cap was first imposed in December.
• Protecting its energy security is a crucial factor that Japan considers when making exceptions to the price cap on Russian oil imports.

Will more countries follow Japan?

• India is believed to be paying more than $60 per barrel to purchase oil from Russia, indicating that other countries are also undermining the West\’s $60 price cap on Russian oil.
• Rising oil prices increase the likelihood of a rift developing among signatories to the oil price cap arrangement.
• When buyers are willing to pay more than $60 per barrel to secure supplies, oil traders may subvert sanctions and deliver supplies from Russia.
• Critics of the oil price cap had warned that implementing it may be difficult due to the strong economic incentives and the opaque nature of the oil market.
• Thus, it may be challenging to track all shipments and ensure that countries are adhering to the $60 per barrel price cap.

Will rising oil prices threaten the West’s price cap?

• OPEC and Russia agreed to cut their oil output by 3.66 million barrels per day, causing oil prices to rise by 6%.
• As a result, Russian Urals, which is Russia\’s main crude oil export, started trading above the $60 per barrel price cap set by the West.
• Although the price cap had no impact on Russia\’s oil output when it was first introduced, the recent increase in oil prices due to Urals trading above $60 per barrel may challenge the cap\’s effectiveness in controlling Russia\’s oil revenues.
• The West would hope that its price cap would keep Russia’s oil revenues in check despite rising oil prices.

Conclusion

Russia, hit by low oil prices and Western sanctions, seeks to boost revenues by selling oil above the price cap. This will test the West\’s ability to enforce its sanctions.

 

Mining of Rare Earth Elements

 Context

Information was given by the Cabinet Minister about Mining of Rare Earth Elements.

Key Highlights

• India possesses the world\’s fifth largest Rare Earth (RE)
• The RE resources in India are low in grade and contain radioactivity, making extraction complex and expensive.
• The Indian RE resource mainly consists of Light Rare Earth Elements (LREE), and Heavy Rare Earth Elements (HREE) are not available in extractable quantities.

Facts about Rare Earth Elements

• India has an in-situ monazite resource of 13.07 million tonnes, containing around 55-60% of total Rare Earth Elements oxide.
• More than 80% of the usage of rare earths in value terms is in RE permanent magnets, requiring Magnetic REE such as Neodymium, Praseodymium, Dysprosium, and Terbium, which are precious REE due to their use in energy transition initiatives.
• Dysprosium and Terbium, which are high-value REE, are not available in extractable quantities in Indian reserves already under exploitation.
• Neodymium and Praseodymium, which occur in the BSM ore of Indian deposits, are available and are being extracted up to 99.9% purity level.
• India has the capability to exploit its rare earth resources up to metal extraction.
• The refining of rare earths is being carried out by Toyotsu Rare Earths India Limited, a subsidiary of Toyoto Tsusho Corporation, Japan, by sourcing rare earth concentrate from Indian Rare Earths Ltd (IREL). However, CRZ regulations, Mangroves, Forest, and inhabitation constrain the minability of REE.

 

What are Rare Earth Elements?

• Rare earth metals comprise a group of 17 elements with unusual properties such as fluorescence, conductivity, and magnetism.
• These metals include lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium, and yttrium.
• Rare earth metals are lustrous silvery-white soft heavy metals.
• These metals are useful when alloyed with common metals like iron due to their unique properties.
• While rare earth metals occur in low concentrations, they can be recovered as by-products from phosphate rock and spent uranium leaching.

 

Reserves & Production

• World reserves of rare earth oxides (REO) are estimated at 121 million tonnes.
• China holds the leading position with 44 million tonnes, followed by Brazil, Vietnam, and Russia.
• China accounts for 90% of the world\’s rare earth production with 140 thousand tonnes.
• Other major producers include Australia, USA, Russia, Malaysia, and Vietnam. These countries process concentrates/partially processed intermediate products in various locations in Europe, USA, Japan, and China.

 

Global Consumption

• The US imported 80% of its rare earth minerals from China in 2019.
• The EU heavily relies on China, with 98% of its rare earth supply coming from China.
• Countries that manufacture high-tech goods and components such as automotive catalyst systems, fluorescent lighting tubes, and display panels, such as Europe, the US, Japan, China, and South Korea, drive the demand for rare earths.

 

India Justice Report 2022

Context

In India Justice Report (IJR) 2022 the State of Karnataka has achieved the top rank among the 18 large and mid-sized States with populations over one crore.

India Justice Report

• The India Justice Report was launched by Tata Trusts in 2019 and this is its third edition.
• The report\’s partners include several organizations such as TISS-Prayas, Vidhi Centre for Legal Policy, and How India Lives.
• The report evaluates the performance of the Indian justice delivery system across four pillars: police, judiciary, prisons, and legal aid. Additionally, it assesses the capacity of the State Human Rights Commissions in the country.

Rising pendency

• Uttar Pradesh has the highest average pendency of cases at the High Court level, with cases pending for an average of 11.34 years, followed by West Bengal at 9.9 years.
• On the other hand, Tripura, Sikkim, and Meghalaya have the lowest average pendency at the High Court level, with cases pending for 1 year, 1.9 years, and 2.1 years respectively.

Increasing caseload

• The number of cases assigned to judges has increased in 22 states and union territories between 2018 and 2022, according to the IJR report.
• Case clearance rate (CCR) is the number of cases disposed of in a year compared to the number filed in that year. A CCR of more than 100% means the number of pending cases is decreasing.
• High Courts are clearing more cases annually than subordinate courts, according to the IJR report.
• Between 2018-19 and 2022, the national average improved by 6 percentage points (88.5% to 94.6%) in High Courts but declined by 3.6 points in lower courts (93% to 89.4%).
• Tripura is the only state where the CCR in district courts remained above 100%, except for 2020, which was the year of the pandemic.
• In 2018-19, only four High Courts had a CCR of 100% or more, but in 2022, this number more than doubled to 12 High Courts.
• The High Courts of Kerala and Odisha have higher case clearance rates, while the High Courts of Rajasthan and Bombay have the lowest rates.

Infrastructure

• The current number of court halls in the country is enough to accommodate the actual number of judges.
• However, if all the sanctioned posts are filled, there could be a problem with space.
• As of August 2022, there were 21,014 court halls for 24,631 sanctioned judges\’ posts, resulting in a 14.7% shortfall.
• Some states like Delhi, West Bengal, and Uttarakhand have no court halls for serving judges, and if every state fills its sanctioned judge positions, only four states and four union territories would have enough court halls.

MISHTI scheme

Context

MISHTI scheme promotes development of 540 Sq. Kms Mangroves across 11 States and 2 Union Territories This information was given by Minister of State for Environment, Forest and Climate Change, in a written reply in the Rajya Sabha.

MISHTI SCHEME

Union Budget 2023 States

India plans to launch the \”Mangrove Initiative for Shoreline Habitats & Tangible Incomes\” (MISHTI), aimed at planting mangroves along the coastline and on salt pan lands using various funds, including MGNREGS and CAMPA.

Why mangroves?

• Mangroves are crucial in the global climate context due to their ability to act as effective carbon stores.
• They host diverse marine life and support a rich food web, providing a livelihood to local artisanal fishers.
• Mangrove forests hold up to four times the amount of carbon as other forested ecosystems.
• They capture vast amounts of carbon dioxide from the atmosphere, aiding in removal of carbon and preventing its release upon destruction.
• Conservation of mangrove forests is crucial to mitigate climate change and protect biodiversity.

 

Mangrove Alliance for Climate (MAC)

• At COP27, the Mangrove Alliance for Climate (MAC) was launched, with India as a partner, to preserve and restore mangrove forests in the region.
• India has one of the largest remaining areas of mangroves in the world, the Sundarbans, and will collaborate with Sri Lanka, Indonesia, and other countries in the alliance to increase its carbon sink.
• The initiative led by the UAE and Indonesia also includes Australia, Japan, and Spain and aims to raise global awareness of the role of mangroves in reducing global warming.
• The alliance works on a voluntary basis, with parties deciding their own commitments and deadlines, and sharing expertise and support to manage and protect coastal areas.

Current state of the mangroves

• South Asia is home to some of the largest mangrove areas in the world, with Indonesia hosting one-fifth of the global total.
• India has around 3% of South Asia\’s mangrove population, including the Sundarbans, Andamans, and Kachchh and Jamnagar regions in Gujarat.
• Infrastructure projects and natural processes have led to a significant loss of mangrove habitats.
• Between 2010 and 2020, more than 62% of the 600 sq km of mangroves lost were due to direct human impacts, according to the Global Mangrove Alliance\’s 2022 report.

 

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