Lithium Mining in India
Context/Why in News?
- India’s journey to secure a sustainable and self-reliant lithium supply chain has encountered significant challenges, particularly with the repeated cancellation of the lithium block auction in Jammu and Kashmir’s Reasi district. These setbacks are prompting reconsideration of the exploration and bidding processes to ensure a more successful outcome in future attempts.
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.
