India’s Lithium dependency

Context

Lithium: The most sought-after mineral

• Lithium has been among the most sought-after mineral during the past few years, largely on the back of its usage in battery manufacturing.
• India is at odds with a major import source for the mineral, China.

What the editorial is about?

• The reasons why Lithium dependency is a worrying factor for India.

Why is India looking for lithium?

Electric vehicles

• India has been scouting for lithium reserves as the mineral is a key component of lithium-ion batteries, the demand for which has surged amid the Centre’s push to boost the adoption of electric vehicles (EVs) in the country.

Production-linked incentive scheme

• The production-linked incentive scheme for advanced chemistry cell (ACC) battery storage, a flagship incentive scheme for the industry has kicked off and the supply of lithium, which is largely an imported product, has declined.

The diplomatic tussle with China

• With India being in a diplomatic tussle with China, the supplies from the neighbouring country have declined and India too is looking for other import avenues.

Why has the supply of lithium declined?

Surge in demand

• The supply of lithium has not been in line with the surge in demand from electric vehicle makers across the world.

The mismatch between demand and supply

• China also is witnessing a mismatch between demand and supply, which has led to a rise in prices.

Does India produce lithium?

• India is dependent on imports for lithium as production in the country is minimal.
• India was importing the by-product, lithium-ion batteries.
• The first traces of lithium have been found in Karnataka’s Mandya district.
• The preliminary find is relatively small, with just about 1,600 tonnes of lithium deposits.

Who are the major lithium producers?

• Australia was the largest lithium producer in 2021, according to US Geological Survey.
• Chile and China have been ranked second.

What is India doing to source lithium?

• India is searching for domestic reserves and looking for newer countries to source the mineral.
• Recently, India committed to jointly invest $6 million with the Australian government to explore lithium and cobalt mines there over the next six months.
• Khanij Bidesh India Ltd (KABIL) has signed a preliminary agreement with Australia’s Critical Minerals Facilitation Office.
• In 2020, KABIL also signed a pact with an Argentine firm to jointly explore lithium in the South American country.

Way Forward

NITI Aayog report

• A NITI Aayog report in 2017 estimated that India’s EV battery market alone could be worth $300 billion from 2017 to 2030 if India could rapidly transition to EVs.
• According to the report, the growth in EV adoption would bring social and economic benefits as dependence on imports reduces, public health improves, and renewables are integrated into the grid.
• The report highlights India’s lack of lithium reserves but offers a solution to the issue.

A solution offered in the report

Focus

• According to the report, India will have the opportunity to produce both battery cells and packs, while importing only the cathode or its raw materials from mineral-rich regions. In this scenario, India stands to capture nearly 80 per cent of the total economic opportunity.
• Hence, a focus on battery manufacturing could allow India to capitalise on the EV boom.

A way to reduce the imports

• The report also believes that the imports of some of the battery components would be more than offset by the lower imports of oils, allowing the country to reduce imports.
• According to the report, India could also scale its operations and become an exporter of batteries as well.

Hope for a stable supply in the future

• Further, as countries such as Bolivia focus on ramping up lithium production, we could see a relatively more stable supply in the future.

Newer technologies

• In addition, newer technologies are being worked on to make EV manufacturing more cost-effective, and less reliant on rare elements.

But till then, India must take steps to prevent lithium from becoming a weakness for the country.

Practice Question for Mains

1. Discuss how India can secure Lithium supplies as renewable energy and EV industry make rapid strides. (250 Words, 15 Marks)