Industry Review     

Published: April 15, 2024
Updated: April 15, 2024

Lithium

India in global hunt for lithium!

Lithium, a white alkaline material, is one of the vital elements and now it is becoming a cornerstone of India’s energy transition for a reduction in the carbon footprint. The mineral is a key component in electric vehicles, battery making, mobile phones and other energy storage solutions. India is totally dependent on imports. However, the discovery of 5.9 million tonnes of inferred lithium reserves in the Salal-Haimana area of Jammu and Kashmir has positioned India as the 7th largest source of this critical element, which has the potential to become a game-changer for the country.

Currently, India’s lithium requirements are being met by Hong Kong and China. We imported lithium worth over $ 720 million during 2020-21. We are also one of the world’s largest importers of lithium-ion batteries.

The country imported 617 million units of these batteries in 2022 for $ 1.8 billion, mainly from China, Japan and South Korea. To counter this, the government introduced a Production Linked Incentive (PLI) scheme for manufacturing advanced chemistry cell batteries.

Doubtlessly, the lithium demand will continue rising manifold, especially when the government has a strong intent to make India an export hub for electric vehicles by accommodating a global EV giant like Tesla – with a few riders. However, on the other side, the response received from public and private sector players to the lithium auction blocks is highly disappointing as only two bids were received for Chhattisgarh and J&K and the auction could not materialise. Hence, it is imperative for the government to make serious efforts to secure lithium overseas and simultaneously prioritise the usage of our own lithium discovery on a war footing.

LITHIUM TRIO

Argentina, Bolivia and Chile form the world’s ‘lithium triangle’, catering to almost 60 per cent of the world’s lithium needs and accounting for the majority of lithium resources globally. Africa is also being considered a potential possessor of this critical mineral. Though China has lithium reserves of 2 million mt, it has a production capacity of nearly 19,000 mt. China relies heavily on imports of lithium, primarily from Australia and Chile. China’s import dependence has prompted some major acquisitions by Chinese mining firms.

Chile has the second largest lithium reserves at 9.3 million mt with 39,000 mt of production capacity. On the other hand, despite having the world’s largest lithium reserves of around 23 million mt, Bolivia has not been able to leverage this bounty due to various socio-political and environmental challenges. If things improve going forward, Bolivia has the potential to influence the lithium industry worldwide.

Looking ahead to the supply side issues of critical and strategic minerals, in 2019 the government of India formed a joint venture company called Khanij Bidesh India (KABIL India). The JV comprises three central PSUs, namely National Aluminium Company (NALCO), Hindustan Copper (HCL) and Mineral Exploration and Consultancy (MECL), in the ratio of 40:30:30 respectively. Of these, the first two are listed entities on the bourses.

KABIL is the only company so far specifically mandated to identify, explore, acquire, develop, mine and procure strategic minerals outside India for consistent supply, primarily to India, to meet domestic requirements due to the non- or meager availability in the country, in order to give a big push to ‘Make in India’.

ARGENTINA DEAL

n a major breakthrough, in January this year, KABIL partnered with Argentina’s CAMYEN for exclusive exploration rights for 5 lithium blocks. The deal was finalized between KABIL and Catamarca Minera Y Energetica Sociedad Del Estado (CAMYEN), an Argentina state-owned mining and energy company. Under the agreement, the company gains mining rights spanning approximately 15,703 hectares.

This strategic move empowers and paves the way for potential discoveries. This might roughly need an investment of Rs 200 crore over the next five years and KABIL would also open its offshore office there. It is estimated that Argentina holds 21% of the world’s lithium reserves, having the distinction of having the second largest lithium reserves and fourth largest production in the world. Moreover, the salt-lake lithium extraction method employed in Argentina proves economically favourable, contributing significantly to production.

Post signing the agreement with Argentine’s CAMYEN, the Mines Ministry is tapping into Chile for similar acquisition opportunities for brine-based lithium blocks. A due diligence for lithium blocks have been planned and discussions are also underway. A non-disclosure agreement with Chilean state-run company ENAMI is now finalizing the modalities.

NMDC SEARCH

In another development, NMDC, the central leading listed PSU and India’s largest iron ore miner, is looking to tap Africa for lithium and other critical minerals. The company has a presence in Australia as well through its subsidiary, Legacy Iron Ore Ltd. Talks are underway for lithium blocks there and NMDC is also negotiating for more lithium blocks with its local partner, Hancock Prospecting. Australia, with 6.2 million tonnes of lithium reserves and 61000 mt of production capacity, has the world’s third-largest reserves and second-largest production capacity.

In a recent analyst’s call by NMDC, Amitava Mukherkjee, Chairman & Managing Director (Additional Charge) and Director-Finance, said, “We will not apply for lithium blocks through the auction route in India but would prefer to do so on a nomination basis from the Centre. In fact, we are looking at lithium beyond the border, even Australia.”

In 2022, the global lithium supply was more than 6.3 lakh mt. As per one study, by 2030 the supply of lithium will cross 2.10 million mt while demand is expected to cross 3 million mt.

It’s a wake-up call for Indian user industries of lithium because if we further delay or fail to secure and commercialise lithium reserves within the country, supported by processing units and a value chain, there is a strong possibility of a repeat of the semiconductor-like story of supplyside disruption. Needless to say, looking at our increasing demand for lithium, on KABIL lines the government also needs to encourage private sector mining companies to hunt for and secure lithium overseas. Only then can we aspire for self-reliance in lithium a couple of years from now.