Nantoo Banerjee
It is difficult to understand why the government is in such a tearing hurry to auction the recently discovered large lithium reserves in Jammu & Kashmir’s Reasi district before the end of the current year itself. The secretary to the Union Ministry of Mines, Vivek Bharadwaj, said the ministry had written to the J & K administration for the transaction advisor for the lithium auction to private actors. The rare non-ferrous mineral reserves in the Reasi district is preliminarily estimated at 5.9 million tonnes by the Geological Survey of India (GSI). The lithium deposit in Reasi is one the world’s largest in a single location. Lithium is one of the key components in electric vehicles (EV) batteries. Nearly two years ago, preliminary surveys by India’s atomic minerals directorate (AMD) found the presence of lithium resources of 1,600 tonnes in the pegmatites of Marlagalla-Allapatna area in Karnataka’s Mandya district. Later, the deposit’s estimate was revised to 14,100 tonnes.
Ideally, the government should set up a public sector enterprise to lead the exercise of lithium mining and look for a well-known lithium mining and processing firm as a joint venture partner to operate the venture. Nothing has been disclosed about the background of ‘private actors’ who may be invited at the December auction. Do they include foreign ‘private actors?’ J&K being a disturbed state and a favourite target of terrorist attacks across the border, what kind of protection will the government offer to intending private entrepreneurs to carry on lithium and other non-ferrous metals exploitation in the region? Many countries have assigned the task of lithium mining to state-owned enterprises on the ground that it is a strategic mineral. Since India has no expertise in lithium mining it may be right to rope in some of the world’s top lithium miners and processors as state sector partners.
As of now, India’s prospected lithium reserves appear to be encouraging. The total worldwide lithium reserves are estimated at only 26 million tonnes. Surveys are on to discover new reserves. As per the US Geological Survey data, Bolivia has the highest identified lithium resources in the world. Others having substantial reserves include Argentina, the US, Chile, Australia, China, India and Germany. Lithium is currently produced from hard rock or brine mines. Australia is the world’s biggest supplier, with production coming from hard rock mines. Argentina, Chile and China mainly produce it from salt lakes. According to the Resources and Energy Quarterly Report by the Australian Department of Industry, Science and Resources in March, the global output was 737,000 tonnes of Lithium Carbonate Equivalent (LCE) in 2022 and is estimated to reach 964,000 tonnes in 2023 and 1,167,000 tonnes in 2024.
Given the importance of the mineral in shaping the growth of the electric vehicle manufacturing industry, Chilean President Gabriel Boric said he would like to nationalise the country’s lithium industry and create a state-owned company to produce the metal.
The Chilean president said future lithium contracts would only be issued as public-private partnerships with state control. Chile is the world’s second-largest lithium producer. Major corporate enterprises engaged in global lithium production include Western Australia’s Talison Lithium, a joint venture firm having a production capacity at 1.34 million tonnes a year of chemical-grade and technical-grade lithium concentrate. Pilbara Minerals, also in Western Australia, produces 360,000 to 380,000 tonnes of spodumene concentrate per annum, with two expansions underway that will increase the production capacity to one million tonnes per annum. Among others are: Advanced Metallurgical Group-owned Minas Gerais of Brazil, which produces 90,000 tonnes of spodumene a year, with plans to expand to 130,000 tonnes by the end of Q2 2023. Sociedad Quimica y Minera de Chile-owned Salar de Atacama produces 180,000 tonnes of lithium carbonate a year. The company plans to expand the capacity to 210,000 by 2024. Argentina’s Pozuelos-Pastos Grandes, bought by Ganfeng Lithium, will produce 30,000 tonnes of lithium carbonate starting 2024, and can potentially be expanded to 50,000 tonnes.
Considering India’s lack of knowledge and expertise in lithium mining and concentrate production, it would be appropriate to rope in a well-known global entrepreneur in this field as a joint venture partner with focus more on domestic consumption than exports, immediately. Initially, the country should launch a single enterprise. The government’s decision to hold a lithium mining auction inviting ‘private actors’ at this stage does not look very practical. The government can’t ignore the risk factor in lithium mining in politically disturbed Jammu & Kashmir
Under the present political environment, one hopes that such an important decision as inviting ‘private actors’ to mine lithium in J&K does not turn out to be a pre-2024 Lok Sabha election gimmick. That would be really unfortunate. The country must try to exploit its lithium deposits as early as possible with a proper project structure. Only last year, Vedanta-Foxconn, having no experience in microchip production, announced the setting up of a $20-billion semiconductor manufacturing project near Ahmedabad before the Gujarat state assembly election.
Neither Vedanta, nor Foxconn has any expertise to manufacture semiconductors and fabrications. They will need a strong technology partner to make the project successful. Little is known about the progress of the semiconductor venture since Vedanta-Foxconn shifted the project location from Maharashtra to Gujarat before the Gujarat polls. The details of the proposed lithium mining projects are yet to be unveiled by the Department of Mines. Lithium mining in J&K by ‘private actors’ may turn out to be more difficult than what the government may think. (IPA)
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