Currently, India imports 100% of its lithium, with a significant portion (over 95%) sourced from China and Hong Kong. The joint venture Khanij Bidesh India Ltd (KABIL), involving NALCO, HCL, and MECL, has secured exploration rights in Argentina, adding to previous agreements with Australia for lithium and cobalt exploration. However, the lithium industry faces a prolonged gestation period, averaging 6 to 7 years from discovery to production in South American brine assets, as per the International Energy Agency (IEA).
Ritabrata Ghosh, Vice President – Corporate Ratings & Sector Head at ICRA, emphasizes that China currently dominates 65% of the lithium processing/ refining industry, an area where India lacks a foothold. He notes, “There are two parts to it: mining and processing, two separate activities that need to be individually focused on and developed. Argentina has brine deposits, for which the extraction and processing technology is well proven. However, one thing is certain: the path to commercializing these assets can be long due to India’s limited expertise in lithium mining and India’s limited track record of successfully developing mining assets in a foreign country due to elevated execution risks. “
Globally, lithium is found in brine deposits, hard rock deposits, and clay deposits. Regarding the discovery of 5.9 million tonnes of lithium bearing minerals in Jammu and Kashmir, Ghosh highlights the challenges: “India’s lithium reserves found in J&K are of clay deposits, a type where commercialization has not been proven globally as yet. While U.S. companies like Lithium Americas are on the brink of commercializing lithium mining from clay deposits in the Nevada valley, assets like Thacker Pass are not expected to come onstream before CY2026. Therefore, the path to commercialization of the J&K lithium mine could well be quite long”.
While the J&K mine has been explored at G3 level, in Chhattisgarh, the second lithium deposit at the Katghora that has been put up for auction, is at a more nascent G4 exploration level. However, here, the lithium bearing mineral is in the form of pegmatite or hard rock, where the extraction and processing technology is commercially proven . Despite lower technological challenges here than lithium extraction from clay, detailed exploration will be required to establish the ore characteristics, and therefore production is not expected from the Chhattisgarh block in the medium term.
Ghosh also raised questions about the additional challenges in commercial viability of the lithium mining from clay in the J&K block. He points out, “Compared to similar ongoing clay mining assets like Thacker Pass in the USA, having resources of 19.1 million tonne of a lithium carbon equivalent (LCE), the ore body discovered in J&K is estimated to have a significantly smaller lithium resources of ~0.02 million tonnes of LCE, indicating a minimal extractable quantity. This raises the second question of whether such a small ore body can be commercially mined.”To expedite the process, Ghosh believes that attracting foreign companies with lithium mining and processing expertise to invest in India will be crucial to accelerate the domestic lithium exploration and mining activities. Government incentives and amendments to mining regulations aim to improve the ease-of-doing business and foster a business-friendly ecosystem, but challenges persist due to the lengthy gestation period and technology concentration in China.In the short to medium term, India is expected to continue import dependencies. Collaboration with foreign experts and partnerships with experienced companies in lithium processing technologies are seen as crucial steps. The government’s tools, including the Production-Linked Incentive (PLI), may play a pivotal role in incentivizing investments and fostering growth in the critical minerals sector.
While progress has been made in removing lithium from the atomic mineral list and incentivizing exploration, achieving self-sufficiency in lithium will require years and decades of sustained efforts.
