EV Industry Charged Up Over Lithium Reserves But There’s More That Meets The Eye

The EV ecosystem in India is fully charged up after the discovery of 5.9 Mn tonne reserves of lithium (inferred estimates) in the Reasi district of Jammu and Kashmir by the Geological Survey of India (GSI).

Lithium is a crucial mineral for the manufacturing of lithium-ion batteries used in electric vehicles (EVs), smartphones, and various other battery-operated electronic devices.

A study by the GSI shows the presence of best quality lithium in abundant quantities in the foothills of Mata Vaishno Devi shrine at Salal village, according to the Mines Ministry.

However, it must be noted that this is not the first time India has found the possible presence of Lithium in the Jammu & Kashmir region. In a 1999 GSI report, there are references to lithium exploration since the early 1990s in the Salal area and the possible presence of ‘high values of lithium’.

The recent development comes at a time when India is making significant progress in EV adoption and is trying to build an overall EV infrastructure. 

While this discovery can act as a major boost to the fast-growing EV ecosystem, the manner and timeframe within which the next steps of exploration are executed would be crucial to watch.

Could This Give An Impetus To The Indian EV Ecosystem?

Lithium, a critical resource category, was sparsely available in India before. The domestic requirements were met through 100% imports, mainly from China.

As per a European Commission report in 2020, the main global producers of the mineral were Chile (44%), China (39%), and Argentina (13%).

A small reserve of lithium was discovered years before in Karnataka. Now, at an estimated 5.9 Mn tonnes of reserves, India could feature among the top three lithium-producing countries.

However, things are not that straightforward.

The exploration of any mineral deposit is divided into four stages — G4, G3, G2, and G1. In the G3 exploration stage, which also derives the inferred estimate, the geologists try to work out the reserves based on far-distance drilling. Based on that result, a mineral’s reserve is calculated, which is 5.9 Mn tonne in this case.

“The confidence level of this reserve calculation is low,” said Pankaj Srivastava, a professor of ore geology, the University of Jammu. He explained that as the next stages of exploration are conducted, this reserve calculation would vary, and the actual reserve calculation might turn out to be higher or lower.

“Exploration is a very costly affair and therefore the organisations, which conduct the exploration, go step by step… it will take at least four to five years to find the proved reserve,” he added.

He said that while the presence of lithium was earlier established in India, no exact amount or reserve estimation was provided, which makes this report stand out, particularly when the demand for lithium is surging.

The central government through its various initiatives has been pushing for faster adoption of EVs in the country. It has envisioned mass adoption of EVs by 2030. Considering the government’s objectives, the lithium discovery is, without a doubt, a shot in the arm for the Centre.

“At a time when the government has been catalysing initiatives toward EV battery manufacturing and green mobility to reach its ambitious net-zero goal by 2070, the report from the Geological Survey of India about the discovery brings hope for localised production of li-ion cells and batteries, which will also go a long way in reducing our trade deficits with the neighbouring country,” said Pankaj Sharma, cofounder and director of Log9 Materials, a battery-tech startup.

The domestic availability of lithium in abundance is also expected to reduce the dependence on imports while successfully solving the supply-chain challenges.

“The increased dependence on neighbouring countries for sourcing raw materials, EV components and even battery packs results in higher EV costs and leaves us with a huge trade deficit,” Sharma of Log9 Materials said.

As India is progressing into cell-manufacturing of batteries, this discovery will provide an impetus to the sector, said Pratik Kamdar, cofounder, Neuron Energy, which provides lead-acid and lithium-ion technology batteries for e-bike, e-rickshaws, and golf carts.

The domestic supply of lithium reserves will further help the EV ecosystem reach the masses at affordable costs.

“There will also be a cost impact as the cells, when manufactured indigenously, will become cheaper,” Kamdar said.

Earlier, Finance Minister Nirmala Sitharaman in her Budget proposals had announced the exemption of customs duty on the import of capital goods and machinery for manufacturing of li-ion cells for EV batteries.

With the tax concession and other crucial initiatives announced by the government in the budget 2023-24, a transformation is expected in the domestic battery manufacturing front, according to Sharma.

However, as per Dr. Prajwal Sabnis, cofounder of Orxa Energies, while the discovery has the potential to craft the ‘India EV story’, the need of the hour is to invest soon and heavily in the mining and refining processes to convert the lithium ores to lithium carbonate or lithium hydroxide, which technology transfers and other important partnerships will help accelerate. 

“Concerted efforts and intensive focus on mining, extraction, refining and making of cells will help push India to global competitive leadership in cells, batteries, and in EVs,” Sabnis said. He also stressed the need to encourage efficient recycling.

Global Production Of Lithium: An Overview

According to a report by the World Economic Forum (WEF), the three largest producers of lithium are Australia, Chile and China. WEF expects the demand for lithium to reach 1.5 Mn tonnes of lithium carbonate equivalent (LCE) by 2025 and over 3 Mn tonnes by 2030.

The world produced 5,40,000 tonnes of LCE in 2021. “Based on the above demand projections, production needs to triple by 2025 and increase nearly six-fold by 2030,” WEF said.

It can take anywhere from six to more than 15 years for new lithium projects to come online. As a result, the lithium market is projected to be in a deficit for the next few years.

China dominates the global lithium supply chain. WEF says Chinese companies have acquired around $5.6 Bn worth of lithium assets in Chile, Canada, and Australia over the years. It also hosts 60% of the world’s lithium refining capacity for batteries.

Back home, although social media has cast doubts over the genuineness of lithium discovery, environment activists have cautioned against reckless mining of lithium, which is being referred to as ‘white gold’.