India has lifted the ban on lithium mining. Why?

Lithium-ion batteries are majorly used in EVs. With the recently discovered lithium resources, India could be looking at a massive opportunity, but experts say environmental concerns must be kept in mind

By Naini Thaker Forbes India Staff

Published: Jul 13, 2023 02:29:44 PM IST

Updated: Jul 14, 2023 11:22:47 AM IST

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A lithium mining machine moves a salt by-product at the mine in the Atacama Desert in Salar de Atacama, Chili; Image: Lucas Aguayo Araos/Anadolu Agency via Getty Images

On Wednesday, the Centre announced that it has lifted the ban on lithium mining, along with five other minerals. The Cabinet approved the amendment in the Mines and Minerals (Development and Regulation) [MMDR] Act. As a result, now private companies can also mine these six minerals.

Around February, approximately 5.9 million tonnes of lithium resources were found in the Salal Haimana area of Reasi district in Jammu & Kashmir, as per the Geological Survey of India. In May, media reports suggested that lithium resources were traced in Rajasthan's Degana as well. The lithium found in Jammu & Kashmir is supposedly of high quality—a grade of 500 ppm, compared to the normal grade of 200 ppm, claims India's mining secretary.

As the world moves towards more sustainable fuel options, the significance of lithium-ion batteries has increased dramatically. Lithium-ion batteries are known for their use in electric vehicles (EVs); reports suggest EVs will account for close to 60 percent of new car sales by 2030. The batteries used in EVs require a significant amount of lithium; for instance, the battery of a Tesla Model S uses around 12 kg of lithium. Additionally, lithium-ion batteries also have use cases in many other electronic products.

Industry experts reckon that the ability for private companies to sustainably mine lithium could be a game changer. “Allowing private companies to participate will result in best-in-class technologies being used for exploration, mining and further refining. The main benefit, though, will be the development of a local battery materials refining ecosystem, which will help lower costs and develop IP, along with other positive agglomeration effects,” says Rajat Verma, founder and CEO, Lohum Cleantech.

So far, India has always been import-dependent, not only for lithium, but also other minerals such as nickel and cobalt. Now, in order to reduce dependency on imports and grow further in the EV manufacturing space, experts reckon the government has lifted the ban on lithium mining.

Also read: Lithium: The demand for the world's critical mineral is set to soar

“Currently, due to the small size of the Indian EV market, Indian players lack the economies of scale to compete with Chinese players when bidding for resources. We believe this [lifting of the mining ban] can change with usage of domestic resources along with an export orientation to increase the addressable market for lithium-bearing finished products,” adds Verma.

According to the US Geological Survey (2022) data, Bolivia has the highest lithium resources at 21 million tonnes, followed by Argentina with 19 million tonnes, Chile at 9.8 million tonnes, Australia at 7.3 million tonnes, and now India at 5.9 million tonnes (as per the Geological Survey of India), and China at 5.1 million tonnes.

“China controls the bulk of the global supply of batteries not only because it is able to produce raw materials, but also because it is able to manufacture cells at scale,” says Ronak Pol, team lead, strategy, Foundation for Economic Development (FED). With the newly discovered lithium in India—valued at Rs34 trillion—India is sitting on a massive opportunity. He adds, “The real opportunity here is for India to competitively tap the $300 billion+ global EV market that is growing rapidly. There is a lot of price sensitivity around lithium-ion cells, given the increasing demand, but if India can scale up production fast enough, it can compete with China and South Korea to supply lithium-ion batteries to the world.”

Also read: 5 myths about lithium-ion you should know

Environmental Concerns

Though lithium’s main use is for renewable energy sources such as electric cars and solar panels, the extraction methods for minerals such as lithium can be energy intensive. Experts reckon that it could lead to air and water pollution, land degradation and groundwater contamination.

As per a report by Earth.org, “It is important to note that fossil fuel mining, including lithium and cobalt mining, is estimated to be responsible for the emission of around 34 billion tonnes of carbon dioxide equivalent (CO2e) worldwide annually. About 45 percent of it is from coal, 35 percent from oil, and 20 percent from gas.” However, of this, the carbon emitted from lithium mining is significantly lesser than fossil fuels. The report adds that it is estimated to be around 1.3+ million tonnes of carbon annually, with every tonne of mined lithium equating to 15 tonnes of CO2 into the air.

Additionally, the production of lithium through evaporation ponds uses a lot of water—around 21 million litres per day. Approximately 2.2 million litres of water is needed to produce one tonne of lithium, according to the euronews.green’s news report. For instance, in Chile—which has one of the largest lithium reserve in the world—over the years, lithium “mining consumes, contaminates and diverts scarce water resources away from local communities”, adds the report.

While the government has lifted the ban on mining lithium, experts reckon these environmental concerns must be factored in.