How can we expand the production of Lithium in India
Key Points About the Lithium Block in J&K’s Reasi District:
Discovery and Significance:
- In February 2023, the Geological Survey of India (GSI) confirmed the existence of lithium-inferred resources estimated at 5.9 million tonnes in Reasi district, Jammu and Kashmir.
- This discovery places India as the seventh-largest source of lithium globally, a crucial element for the production of electric vehicle (EV) batteries.
Auction Challenges:
- The first auction attempt in November 2023 was annulled by March 2024 due to insufficient bidder participation.
- A subsequent auction also failed due to no qualified bidders, indicating significant investor hesitation.
Regulatory and Procedural Hurdles:
- Despite the Mineral (Auction) Rules, 2015 allowing for auctions with fewer than three bidders, the absence of any qualifying bids has halted progress.
- This reflects broader concerns about the block’s viability and investor confidence.
Investor Concerns:
- Clay Deposits: The lithium reserves in J&K are primarily clay deposits, which have not been proven commercially viable on a global scale, adding to investor uncertainty.
- Lack of Beneficiation Studies: The absence of studies evaluating the economic feasibility of extracting and processing the lithium raises doubts about the project’s profitability.
- Exploration Status: The block’s current exploration status is at the G3 level (preliminary stage), leading to high-risk perceptions due to the uncertain data.
- Economic Viability and Reporting Standards: The high reserve price from previous bids, coupled with insufficient reporting standards, has further discouraged investors.
- United Nations Framework for Classification of Resources (UNFC)
The UNFC is a globally recognized system for classifying mineral resources based on exploration stage and confidence level:
- G4 – Reconnaissance: Initial exploration with low confidence estimates.
- G3 – Prospecting: Preliminary exploration with continued low confidence.
- G2 – General Exploration: More detailed exploration providing moderate confidence.
- G1 – Detailed Exploration: Advanced exploration with high-confidence estimates.
Status of Lithium Exploration in India:
Success in Chhattisgarh:
- India’s first successful lithium auction took place in Korba district, Chhattisgarh, in June 2024, awarded to Maiki South Mining Pvt Ltd with a 76.05% premium.
- Additional lithium deposits with concentrations ranging from 168 to 295 parts per million (ppm) have been identified in Korba.
Challenges in Other Regions:
- Manipur: Local resistance has stalled lithium exploration in Kamjong district.
- Ladakh: Disappointing results in the Merak block have led to the suspension of exploration activities.
- Assam: Exploration in Dhubri and Kokrajhar districts has not shown promising results, leading to recommendations against further exploration.
The Strategic Importance of Lithium for India:
Lithium’s Role in Green Technology:
- Lithium is essential for EV batteries and renewable energy storage systems, critical for India’s commitment to achieving net-zero emissions by 2070.
- With a projected need for 27 GW of grid-scale battery storage by 2030, India’s demand for lithium is set to soar.
Global Supply Constraints:
- The World Economic Forum has highlighted potential lithium shortages due to increasing global demand, especially for EVs and rechargeable batteries.
- India currently imports 70-80% of its lithium, primarily from China, creating vulnerabilities in its supply chain amidst geopolitical tensions.
Challenges in Lithium Extraction and Investment in India:
Extraction and Environmental Concerns:
- Extracting lithium from hard rock pegmatite deposits is technologically complex and environmentally challenging, with significant habitat destruction and pollution risks.
- Remote locations, like Reasi, further complicate logistics and increase operational costs.
Nascent Industry and Lack of Infrastructure:
- India’s lithium sector is still in its infancy, lacking the necessary mining and processing infrastructure.
- The absence of domestic expertise and reliance on outdated mineral reporting standards further hampers progress.
Investment and Global Competition:
- Investors are wary of India’s current mineral reporting standards, which do not align with globally recognized frameworks like the CRIRSCO.
- Additionally, local socio-political tensions and global competition for lithium resources make investment in Indian lithium projects less attractive.
Conclusion/Way Forward:
- India’s ambition to establish a domestic lithium supply chain is crucial for its transition to a green economy, yet it faces significant challenges. To overcome these, India must:
- Attract Global Expertise: Inviting foreign companies with proven expertise in lithium mining and processing will be essential for accelerating the sector’s growth.
- Learn from Global Leaders: Drawing lessons from countries in the Lithium Triangle (Bolivia, Chile, and Argentina) on state-controlled extraction and robust regulatory frameworks can guide India’s approach.
- Engage Local Communities: Involving local communities and addressing socio-economic impacts are vital for sustainable development.
- Government Initiatives: Strengthening government incentives, simplifying regulations, and ensuring ease of doing business will attract more investment.
- Further Exploration: Continued exploration efforts may provide better data and increase investor confidence, potentially making the block more attractive in future auctions.
- Consider Government-Led Development: If private investment remains elusive, the government could directly develop the lithium block through state-owned enterprises, ensuring progress despite investor hesitation.
- India’s path to becoming a key player in the global lithium market is challenging but attainable with strategic planning, robust policy frameworks, and sustained efforts in exploration and development.
