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Published on: Feb. 28, 2023, 5:26 p.m.
Lithium discovery: A long-haul story?
  • Discovery of lithium reserves: Will it put Jammu & Kashmir on the global map as a vibrant economic zone?

By Ritwik Sinha. Consulting Editor, Business India

The sceptre of an epic scale proposition, which may have national importance, does can well evoke extreme response from different quarters. And this is what seems to be playing out in the country, after the revelation by the Geological Survey of India (GSI) early this month of a possible large-scale discovery of lithium reserves in Reasi district of the Union Territory of Jammu & Kashmir. And considering the country’s blank slate status in lithium production and its growing demand to adopt circular economy norms and greener planet, the announcement has been greeted in all quarters.

While, for some, it has become the reason to momentarily turn into cheerleaders, there are also those who seem to be speechless besieged by that typical ‘too big to be true’ feeling. “The quantum of 5.9 million tonnes is simply mammoth,” says a senior official of a mineral firm. “Such kind of discoveries happens once in a half century. From India’s perspective, it is so critical. We would like to be part of it in some way. We are waiting for more details”. 

The significance of this discovery of white gold or white oil (this is how lithium is normally defined in the exploration terms) is well reflected by its subtle intrusion in public discourse in myriads of ways, outside the realm of prospective business stakeholders. Some people are calling it a divine intervention (the site is about 40 km from the holy shrine of Mata Vaishnodevi) to further escalate India’s ranking in global economic order. Others feel it is all slated to put Jammu & Kashmir on the global map as a vibrant economic zone – different from its existing stereotyped identities.

In a recent television debate, while taking a potshot at the ruling BJP representative, the principal Opposition party member present in the debate had asked if the government has already decided the miner to dig out the white gold (obvious reference of Adani). And, then, there are jingoistic claims on social media and also television debates that finding lithium reserves mean India getting out of the clutches of China on one more critical commodity. Even a fringe terrorist group from across the border has reportedly issued a fatwa saying that no exploration exercise will be allowed at the site, as it would mean robbing the state of its resources. 

On a more serious note, though, there is a unanimity that, even if a truncated volume of the current estimates is ultimately extracted, it is going to make a world of difference to India’s bid for energy security. However, the announcement could well be the beginning of a long-haul process, where many twists and turns may emerge on the way. 

Global scenario 

It is no secret to anybody that lithium has to play a critical role in the world’s larger quest for greener solutions as well as promotion of circular economy norms. The lithium ion batteries are increasingly becoming the major driving force in the applications, particularly for gigantic mobility and electronic sectors. Within the lithium sector, a parallel industry has come up prominently, which pertains to recycling of lithium cells and bestow upon them the second life cycle. 

The anticipation of the existing global lithium reserves reaching to an exhausted state in the coming decades has given a major boost to this parallel modality. 

There is no gainsaying that the transition to EV era globally has begun pushing the demand for lithium to a new stratosphere. The annual data released by the US Geological Survey Department on the exploration trends of lithium is considered to be the most authentic and most preferred data base by the global stakeholders. And the latest one (released in January) is testifying the theory that lithium demand has begun touching the roof.

  • The transition to EV era has pushed the demand for lithium to a new stratosphere

According to the report, the global lithium production in 2022 rose by 21 per cent (excluding production in the US), to reach 130,000 tonnes from 107,000 tonnes in 2021, in response to strong demand from the lithium-ion battery market and increased prices of lithium. Global consumption of lithium in 2022 was estimated to be 134,000 tonnes, which marks a 41 per cent jump over 95,000 tonnes figure notched the previous year.

In terms of sectoral utility, EV and electronics batteries lead the pack with 80 per cent share, followed by ceramics and glass (7 per cent), lubricating greases (4 per cent), continuous casting mold flux powders (2 per cent), etc. “Lithium consumption for batteries has increased significantly in recent years, because rechargeable lithium batteries have been used extensively in the growing market for electric vehicles and portable electronic devices, as also in electric tools and grid storage applications. Lithium minerals were used directly as ore concentrates in ceramics and glass applications,” says the report. The production registered last year was mainly contributed by Australia, Brazil, Argentina, Chile and China. 

The report further underlines an improvement in the estimated lithium reserves in the world, which stands at 98 million tonnes, with Bolivia (21 million tonnes), Argentina (20 million tonnes), Chile (11 million tonnes), Australia (7.9 million tonnes) and China (6.8 million tonnes) being the top five reserve holders. Germany, Congo (Kinshasa), Canada, Mexico, Serbia and Russia are estimated to be countries with over 1 million tonnes reserves of the white gold, while Peru, Mali, Brazil, Zimbabwe, Spain, Portugal, Namibia, Ghana, Finland, Austria and Kazakhstan have sub-1 million tonnes reserves.

China though is not in the top three in terms of reserves but has a dominant position in the market, with its control of critical lithium mines in African countries (signed mostly during 2000-2010) and has developed a refining capacity, which is unmatched in scale. International Energy Agency in its World Energy Outlook 2022 report had maintained that China accounted for roughly 60 per cent of the world’s lithium chemical supply. China also produces three-quarters of all lithium-ion batteries. 

The dice, therefore, is loaded in favour of China, which will use its hegemony to its advantage, as the demand spirals (from the current demand of about 300,000 tonnes to a little less than 3 million tonnes by the end of the decade). The broader trends during the last year testify to this theory, as there has been a major spike in lithium prices (as US geological survey report underlines).

“Spot lithium carbonate prices in China (cost, insurance and freight) have increased from about $35,000 per tonne in January to about $67,000 per tonne in November,” the report underlines. “For fixed contracts, the annual average US lithium carbonate price was $37,000 per tonne in 2022 – almost three times higher than that in 2021. Spot lithium hydroxide prices in China (free on board) have increased from about $35,300 per tonne in January to about $78,000 per tonne in November. Spot spodumene (6 per cent lithium oxide) prices in China (cif) have increased from about $4,900 per tonne in January to about $5,800 per tonne in November”.

  • The fresh discovery of huge lithium reserves in the country is a constructive development for all

    Madhumita Agrawal, CEO, Oben Electric

India’s entry 

Now cut to the Indian scene. The recent announcement of GSI of a possible white gold mine with a hefty reserve potential (discovered in rock form) in Jammu & Kashmir has come as a major surprise and relief. With the country having a blank slate in lithium reserves (India’s lithium ion import has almost doubled from about Rs8,500 crore in 2018-19 to an estimated over Rs16,000 crore in 2022-23) but, being one of the fastest growing big economy making decisive transition to EV era, apprehensions have been expressed in no uncertain terms that, probably in this segment too, the country will be import-dependent like fossil fuel. The proposition of finding nearly 6 million tonnes of lithium in its own backyard (valued at Rs36 lakh crore) therefore, if true, could well mean hitting a jackpot for the country. It will not only eliminate India’s import dependence, but could also make it a net exporter and earner for the country. 

“The fresh discovery of huge lithium reserves in the country is a constructive development for all,” says Madhumita Agrawal, CEO, Oben Electric. “These reserves will not only help drive the EV movement further, but also reduce the import burden of lithium from other nations, lower EV battery prices to some extent, and bolster local manufacturing, whilst fostering the ‘Make in India’ programme of the government. India will now set forth its foot in exporting lithium, adding to the economy’s overall growth and GDP”.

Adds Nitin Gupta, CEO, Attero Recycling: “This is a major development. It will deliver strategic advantage to India in the medium to long run vis-à-vis energy security. It also means the country will have to quickly ramp up lithium refining capacity where players like us will have an important role”. 

A recent report released by the Council on Energy, Environment & Water (CEEW), meanwhile, projects India requiring an investment of Rs33,750 crore (about $4.5 billion) to achieve the government PLI target of setting up 50 GWh of lithium-ion cell and battery-making plants. The report underlines the country requiring up to 903 GWh of energy storage to decarbonise its mobility and power sectors by 2030 and lithium-ion batteries will meet the majority of this demand. “For a green future, minerals like lithium will be as important, as oil & gas are today,” says Rishabh Jain, senior programme lead, CEEW. “It’s in India’s strategic interest to not just secure the mineral, but also set up the required cell and battery manufacturing systems within the country”. The domestic discovery, as Jain points out, could be a shot in the arm to develop a formidable ecosystem for lithium development and deployment, provided the allied activities are undertaken diligently and holistically. 

The discovery announcement has also seen critics pointing at the lethargic response of governments in 1990, when the GSI had conveyed on two occasions the possibility of finding lithium at the site after a preliminary investigation. Incidentally, just a few days before GSI’s latest announcement, which has brought cheers all around, Pralhad Joshi, Union minister for mines, coal and parliamentary affairs, had emphasized, in a detailed reply in Lok Sabha, that the government has stepped up lithium exploration drive in the recent years.

  • This is a major development. It will deliver strategic advantage to India in the medium to long run vis-à-vis energy security

    Nitin Gupta, CEO, Attero Recycling

“During the last five years, Geological Survey of India (GSI), an attached office of the ministry of mines, has carried out 20 projects on Lithium and associated elements in Andhra Pradesh, Arunachal Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu & Kashmir, Madhya Pradesh, Meghalaya and Rajasthan. During field season programme 2022-23, GSI has taken up 18 projects on lithium and associated elements in Arunachal Pradesh, Chhattisgarh, Jammu & Kashmir, Jharkhand, Meghalaya, Nagaland, Rajasthan. Further, Atomic Minerals Directorate for Exploration and Research, a constituent unit of Department of Atomic Energy, is carrying out exploration for lithium in parts of Mandya and Yadgir districts of Karnataka,” he had said in his reply.

“Khanij Bidesh India (KABIL), a joint venture of three CPSEs under the ministry of mines, is exploring opportunities for investment in lithium mines in Argentina and Australia,” he had further maintained, probably to send the larger message that government is sparing no efforts to ensure that country’s requirement of lithium is met through own sources in the future. Meanwhile, in 2021, preliminary surveys by Atomic Minerals Directorate for Exploration & Research (AMD) had indicated the presence of lithium resources of 1,600 tonnes in the Mandya district in Karnataka. 

 What next 

After the initial euphoric reaction phase settling now, how the scene unfolds further leading to more scientific analysis at the site, real digging eventually leading to commercial production is the moot point of discussion for the stakeholders. “No doubt, all of us are excited with this development,” observes Rajat Verma, CEO, Lohum Cleantech. “But the findings are inferred. As you go deep with further examination to get more accurate estimates, the quantum can drastically fall. It is going to be a long-haul story and, even if you get 30-40 per cent of what has been suggested, it will be quite huge”. 

According to United Nations Framework Classification (UNFC), the reserves are classified into four broader stages – G4 (reconnaissance), G3 (prospecting), G2 (general exploration) and G1 (detailed exploration). The recent announcement is based on G3 stage analysis and this stage itself has four other phases – general, preliminary, detailed and prospecting-exploratory. “In G3 stage, you undertake a bit of drilling, more detailed mapping and sample collection, which gives you a basic idea of the structure of the mine,” explains Pankaj Shrivastava, professor, geology department, Jammu University.

“At this stage, the level of inaccuracy could be as high as 30-50 per cent, on both lower and higher sides. In G2, you undertake closed space drilling, which gives you a more comprehensive picture of reserves volume. Here, the chances of inaccuracy are 15-20 per cent. Based on findings at the end of G2, you move to G1 and kick-start real drilling and exploration. Graduation at each stage entails high-cost investigation”. Shrivastava has studied the site closely for the past few decades.

“Even in the best case scenario, I don’t think actual production will happen in the next few years. It may happen in a 5-10 year period. Normally, graduation from G3 to G1 stage takes five-six years,” he adds, while also emphasising that procuring the right technology will not be an issue for the stakeholders, who will get involved. 

  • Spot lithium hydroxide prices in China (free on board) have increased from about $35,300 per tonne in January to about $78,000 per tonne in November

According to Jain of CEEW, future development at the site will be a function of deeper analysis of two key parameters. “Economic and logistical viability are the two prime considerations,” he informs. “Please remember, Bolivia has the highest lithium reserves but the output is zero there, because it has not been able to overcome some basic challenges.” 

In the coming months, more concerns are slated to surface (including environmental issues, as an analyst points out), but according to Amit Sharma, secretary, ministry of mines, Jammu & Kashmir government, as per G3 analysis, lithium of the best quality has been found at the site. “Against the normal grade of 220 parts per million (PPM), the lithium found in J&K is of 500 ppm-plus grading.

The Union ministry of mines has handed over the report to us for the next steps. We will soon take a call on further advanced inspection or investigation (part of the process) in collaboration with GSI scientists,” he told Business India in a brief telephonic chat. Responding to the timeline issue, that is, whether the real recovery could be a long-haul scenario, he assured that is unlikely to be the case.

“Timelines will be drawn soon. We will expedite the process. Considering the advent of EV era and rise in demand of other applications, based on lithium, it is in our national interest to harness this reserve expeditiously, which will give such a big boost to our Aatmanirbhar Bharat goal,” Sharma adds. As of now, what Sharma is promising will definitely strike the right note with those who would like to see fast-paced action in the country’s pursuit for the white gold.

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