The Lok Sabha on Friday amended the country's mining rules, paving the way for private companies to mine lithium, a key raw material required to manufacture battery cells.

One of the major reforms proposed in the Bill is the removal of "lithium-bearing minerals" and five other atomic minerals from a prohibited list, thus opening the sector to private miners. Due to their inclusion in the list of atomic minerals, only state-run entities were allowed to mine and explore these minerals.

These minerals have various applications in the space industry, electronics, communications, energy sectors, and electric batteries and are critical in the net-zero emission commitment of India.

"Upon removal of these minerals from the said list, exploration and mining of these minerals will be opened up for the private sector as well. As a result, exploration and mining of these minerals is expected to increase significantly in the country," the amendment says.

The mineral sector requires more reforms, particularly for increasing exploration and mining of critical minerals that are essential for economic development and national security in the country, the new bill reads.

The lack of availability of the critical minerals or concentration of their extraction or processing in a few geographical locations may lead to supply chain vulnerabilities and even disruption of supplies, it says, adding that the future global economy will be underpinned by technologies that depend on minerals such as lithium, graphite, cobalt, titanium, and rare earth elements.

The Mines and Minerals (Development and Regulation) Amendment Bill, 2023 proposes that the exploration licence granted through auction shall permit the licencee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals. The blocks explored by the exploration licence holder would be auctioned for mining lease within the prescribed timeline, which will fetch better revenue to the state governments.

Deep-seated minerals, such as gold, silver, copper, zinc, lead, nickel, cobalt, platinum group of minerals, diamonds, etc. are difficult and expensive to explore and mine as compared to surface or bulk minerals and thus the share of deep-seated minerals in total mineral production is meagre currently. India is mostly dependent on imports of these minerals.

China tops in the processing of rare earth metals—with 58% of the world's lithium processed in China, along with 35% of the world's cobalt, and 40% of the world's copper used in the manufacturing of battery cells, according to data compiled by ICRA.

The proposed exploration licence would facilitate, encourage and incentivise private sector participation in all spheres of mineral exploration for critical and deep-seated minerals, says the amendment.

The amendment comes five months after 5.9 million tonnes (MT) of lithium reserves were discovered in the Reasi district of Jammu & Kashmir (J&K). The Geological Survey of India found the G3 category lithium in the state, which means more research and studies are required to reach the final 'confident G1 or G2' category of 'mineable reserves'.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.