Why Is Everyone Excited About The Lithium Deposits Discovered In Jammu?

With 5.9 millon tonnes worth of lithium deposits discovered in Jammu, India has now joined a special league of nations that can boast of having the rare metal reserves.

Lithium is essential to the pursuit of lithium-ion batteries that are critical for the development of the electric vehicle (EV) manufacturing industry.

To put things in perspective, until 2015, EV manufacturing only made up for 30 per cent of the lithium demand. By 2030, 95 per cent of the demand for lithium is estimated to be for EVs alone, surpassing other industrial applications. 

The world wants to transition towards a greener future. For India, an additional incentive in moving towards EVs is the consequential reduction in oil imports.

With 5.9 million tonnes worth of lithium reserves, India is in the same league as Chile, Australia, Argentina and China. Some of the smaller reserves have also been discovered in the United States of America, Mexico, Canada, Zimbabwe, Mali, and Democratic Republic of Congo.

Production of lithium has been led by Australia, Chile, and China, each exceeding the pre-pandemic production capacity in 2021. 

Lithium is mined from salty water or rocks, and depending on the composition of the battery, used by the manufacturers, as lithium hydroxide or lithium carbonate, and this is where the problem begins for the global supply chains.

An average electric vehicle requires 33 kilograms of lithium chemicals, and the demand for these chemicals is set to increase by 400 per cent by the end of this decade, resulting in an inevitable spike in prices.

The problem; currently, China controls almost two-thirds of the lithium processing capacity. 

The first consequence of the discovery of the lithium deposits must be the inclusion of India into the Minerals Security Partnership (MSP) initiated by the US in 2022 to immune the critical minerals supply chain against China.

Already, Australia, Canada, Finland, France, Germany, Japan, South Korea, Sweden, United Kingdom, and the European Commission are a part of this partnership.

Complementing the US Chips and Science Act for semiconductor manufacturing, MSP was focussed on electric vehicles and advanced batteries. 

For over a decade now, the Chinese government has been making strategic investments globally, and countries in the West are now waking up to the challenge.

In November 2022, Canadian government ordered Chinese companies to divest their stakes in critical mineral companies.

However, China’s influence in the Latin American region is coming to their rescue as they race to secure the mining rights in Bolivia. Between 2012 and 2018, China invested close to $5 billion in Bolivia across the energy and chemicals sectors. 

Going forward, one of the opportunities that open up for India is to play a critical role in the global supply chain.

From 2020, lithium prices have increased more than ten-fold, hovering around $75,000-$80,000 per tonne for the most part of 2022.

However, in the long run, say ten to fifteen years, India should not be focussed on mining alone, but refining as well, as that would be the magnet for most manufacturers. To mine lithium here, only to have it refined elsewhere, would not suit India’s interests in the long term. 

As things move in India, another priority of the government should be to ensure that any mining project in the region does not go through the same loops as many infrastructure projects in India do.

What happened to Sardar Sarovar Dam or more recently the Sterlite Copper Plant, must not happen to India’s lithium mining interests. Environmentalism must be taken seriously, sure, but not at the expense of economic development.

The lobbies would swing into action soon, and therefore, best for the government to prepare. 

Further, can the government incentivise homegrown companies interested in the refining process?

Globally, companies today are engaged in direct lithium extraction (DLE) using adsorbents. Pre-commercial technologies are where the government must ask interested private companies to focus.

These include DLE via ion exchange, solvent extraction, and electrochemical separation. Also, depending on the manufacturers’ need, refiners will have to balance between lithium carbonate and lithium hydroxide. 

Lithium deposits alone are no guarantee, not even remotely, of India dominating the EV manufacturing game, but they do increase the country’s leverage, assuming the extraction is viable and sustainable.

To compete with China will be an uphill battle going forward and requires heavy investments in research, development, and application, on both mining and refining part.

It would also be ideal for the government of the day to collaborate, for financing purposes, with countries that are announcing their mining funds and picking up minority stakes in critical minerals projects; Saudi Arabia, for instance. 

Simultaneous efforts, public and private, must be initiated and backed. All the right reasons to be excited about the discovery, but only if complemented with the right pursuits across industries, from lithium mining to EV manufacturing.