Lithium

In the worldwide push for sustainability, lithium has been a key ingredient facilitating the transition to zero-emission energy use. At the same time, the growing global demand for lithium-ion (Li-ion) batteries poses a challenge for India, a country that relies heavily on imports for both lithium and Li-ion batteries. The recent discovery of lithium deposits in Jammu & Kashmir is the first indication of substantial indigenous reserves. While this development has many excited, is it enough to guarantee self-sufficiency? Further, as India moves towards its net zero goals, what can the nation do to secure its future lithium needs?

Recent Trends And Developments

According to the US Geological Survey, global lithium consumption reached 134,000 tonnes in 2022, up 41% from 2021. Total worldwide production that year was slightly lower, at ~130,000 tonnes, up 21% YoY. Resultantly, benchmark Mineral Intelligence reported a 183% year-on-year increase in its lithium price index as of December 2022. This also corresponds to rising demand for light-duty electric vehicles (EVs), of which 6.3 million were sold last year – a market that is projected to reach 26.7 million units by 2030. In India, 4% of all vehicles sold last year were electric, against the official target of 30% EV penetration by 2030.

Going forward, the World Bank projects that the EV market will grow at a CAGR of 24% through 2028. Spurred by policy measures as well as economics, electric 2-wheelers, 3-wheelers and commercial vehicles (especially intra-city buses) have the strongest growth promise. At the same time, India’s demand for Li-on batteries, which currently stands at 3GWh (Gigawatt Hours), is expected to grow to 20GWh in the next three years and 70GWh by 2030. Much of India’s consumption of Li-on batteries is met by imports, including from China – a world leader in lithium refining. This makes it imperative for India to pursue diverse methods to secure its lithium and Li-ion battery supplies.

India’s Quest To Secure Lithium

As part of the Indian government’s Rare Earths Mission, several exploratory projects for critical mineral deposits are currently underway. So far, this has yielded two finds of lithium. In 2021, a relatively small deposit – roughly 1,600 tonnes – was discovered in Karnataka, but in February 2023, the project hit upon a much larger deposit in the Reasi district of Jammu & Kashmir. Early estimates put the amount at 5.9 million tonnes. To put this in context, the world’s known lithium reserves currently stand at ~98 million tonnes. If these calculations are accurate, therefore, this could be a game-changer, putting India at the higher-end of lithium-producing nations. That said, it usually takes at least 3-5 years for a lithium mine to begin production in earnest, which means that it will be a while before India achieves a semblance of self-sufficiency in this area.

In the interim, India has been incentivising Li-ion manufacturing by imposing a 10% import duty on such cells (up from 5% previously) and extending the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) 2 benefits to EVs powered by Li-ion batteries. To promote green mobility, the 2023 Budget also pledged to eliminate duties on imports of capital goods and machinery used in the production of lithium-ion cells. Additionally, India is exploring lithium assets overseas. Khanij Bidesh India Limited (KABIL), a joint venture between 3 PSUs to ensure India’s supply of strategic minerals, has recently identified lithium mines to acquire or lease in Argentina. India and Australia are also in talks to collectively invest in exploring lithium and cobalt mines in Australia, to set up refineries and battery manufacturing plants and supply critical minerals to India. Several African nations have also offered their lithium reserves for India to mine in exchange for lines of credit.

The Road Ahead

Even if the J&K deposit lives up to its promise, India must deploy every weapon in its arsenal to ensure supply-chain continuity. On current indications, the intent is certainly there. Battery recycling is a viable source of lithium and could meet 16% of annual demand by 2035. Once an EV battery’s drop-in capacity falls below 70-80%, it can still be utilised for household energy storage. In 2022, new Battery Waste management rules based on Extended Producer Responsibility (EPR) came into force, mandating collection and recycling of batteries, and tax sops for recyclers. Current recycling technology can recover up to 50% of a spent battery’s economic value by repurposing its key metals, including lithium, and this figure may go up to 80% in the future.

 The government has also eased restrictions on lithium mining by private companies and is expected to auction contracts for private parties to develop and operate lithium mines. Manikaran Power is in the process of setting up India's first lithium refinery while big names like Reliance, Hero, Mahindra and Adani are venturing into Li-ion cell manufacturing. Looking ahead to the next few years, this combination of policy support from the government and private participation across the entire value chain, will be crucial if India is to power its green energy transition.