India discovers lithium; may take years to get into batteries

Geological Survey of India (GSI)'s assessment that for the first time India has discovered 5.9 million tonnes (MT) of lithium in Salal-Haimana area of Reasi District of Jammu & Kashmir has created a buzz around the country for commercially using lithium for the country’s upcoming energy transition, but it is too early and may take years, feel experts.

India imported an estimated ₹8,800 crore worth of lithium batteries in the 2020-21 and over ₹170 crore worth of lithium metal and the market is growing faster. In Union Budget 2023, the government exempted customs duty on imports of capital goods and machinery for manufacturing of li-ion cells for electrical vehicle (EV) batteries, to boost battery production and EV penetration in India.

Experts note that the GSI's finding is now in the G3 category of initial assessment (Inferred Resources), which means more research and studies are required to reach the final 'confident G1 or G2' category of 'mineable reserves', where the ministry of mines can exactly determine how much tonnage is available, how much can be extracted and also determine the quality of the mineral. Even then, it may take a minimum 5-7 years to commercially exploit the 'soft, silvery-white metal belonging to the alkali metals group', they say.

They cite the euphoria surrounding lithium is related to the upcoming EV adoption and renewable energy storage happening around the globe. Lithium batteries can provide up to 10 times longer life than lead-acid batteries and are already 50-60% light weight in comparison, besides with better efficiency. In batteries, lithium is used across cathode chemistries (and potentially next-generation anodes). Nickel and cobalt are also used in certain cathode chemistries and copper is used for windings and rotors in motors. Currently, these materials account for about 50% of a battery’s total cost.

"Currently, India is also progressing into cell manufacturing of batteries and it will provide the much-needed impetus to the sector as it will reduce the dependence on imports while also solving the supply-chain challenges as the country will have its own reserves of lithium, besides bringing down costs", says Pratik Kamdar, Co-Founder,Neuron Energy, a four year old Mumbai based company into lead-acid and lithium-ion technology batteries for E-Bike, E-Rickshaws, and Golf Carts.

The India Energy Storage Alliance (IESA) estimates the annual demand for energy storage in India will grow from under 10 gigawatt hour (GWh) currently to over 50 GWh by 2025 and over 150 GWh by 2030. As per NITI Aayog, India’s battery storage market is expected to reach more than 1000 GWh by 2030, translating into a cumulative market size of $250 billion.

A recent International Energy Agency (IEA) study says China accounts for 58% of lithium processing globally, followed by Chile (29%) and Argentina (10%), though Australia accounts for 52% share, followed by Chile (22%) and China (13%) in extracting this mineral. According to McKinsey, most of the confirmed  lithium reserves are found in Latin America and Australia (5.7 MT). Of the top ten countries with the largest concentration of lithium reserves, Chile tops the list, with 9.2 million MT (obtained from brines), followed by Argentina (2.2 MT), China (1.5 MT) and less than one MT in Mexico, Canada, Congo, Mali and Zimbabwe.

"The Indian EV industry is heavily dependent on imported cells from China and Taiwan. With this new development, battery costs are expected to come down significantly, as we will now be able to source cells from within the country", says  Varun Goenka, CEO & Co-Founder, Chargeup.

Since July 2022, spot prices for battery-grade lithium grew by over 400 percent year over year, while nickel prices more than doubled in the same period, owing to recent market disruptions following the Russian invasion of Ukraine and years of underinvestment in the mining sector, says McKinsey's experts in a recent briefing note on 'Sustainable and inclusive growth'.

"EV projections show demand for these materials (lithium, nickel and cobalt) ranging from two to 12 times the current levels by 2030, depending on the mineral, with the largest growth rate for lithium. Under the 'Fading Momentum' scenario (slower uptake of EVs and less plastic recycling/avoidance due to tech/supply delays and lack of regulation enforcement), the gap between the supply of materials and the demand required to reach 29 percent of new car sales is around 3.7 to 5.2 MT by 2030, estimates McKinsey.

"The unavailability of Lithium has been one of the reasons why India has been dependent on other countries for Li-Ion batteries and other EV components. Lithium being one of the core elements of the Li-Ion batteries and taking into consideration the financial impact of sourcing Lithium, the recent discovery of Lithium reserves in J&K does come in as a new lease of life as it further enables India’s ambition to become self-sufficient in its energy storage needs", says Pankaj Sharma, Co-Founder and Director of Log 9 Materials, a battery-tech start-up.