India’s lithium industry, Potentials and pitfalls (GS paper 3, Economy)
Context:
- In the race to combat climate change, many governments have begun to embrace electric vehicles (EVs) as the transportation of the future. Lithium, with its high power density, quick recharge, and recyclable nature, is considered the best battery material for EVs.
Details:
- EVs have no tailpipe emissions and a much lower carbon footprint overall because they are powered by lithium batteries instead of burning gasoline.
- Researchers are attempting to develop lithium alternatives, but potential replacements are currently too heavy or too large to be commercially viable.
- However, while the sudden surge in demand presents an opportunity for economic growth at first glance, lithium mining in developing countries has proved to be a double-edged sword.
- As the buzz over India’s own recently discovered lithium deposits settles, it must consider how to maximise profit and minimise possible risks.
A history of exploitation:
- Besides China and Australia, the largest lithium producers are South America’s Argentina, Bolivia, and Chile, known as the Lithium Triangle.
- United States (US) and China-based companies conduct the most mining in Argentina and Chile.
- These companies mine the lithium from large salt flats and send it elsewhere to be refined, leaving the host country out of the most profitable part of the process.
- Additionally, these corporations are often insensitive to the needs and concerns of indigenous populations that surround the mines.
- Communities say mining activities have compromised the area’s land and water resources.
- Indigenous advocates say that the Salar de Hombre Muerto mines in Argentina have violated their constitutional rights.
Case of Bolivia:
- In Bolivia, the lithium industry has had the opposite problem.
- Bolivia has nationalised its lithium deposits, and indigenous groups have resisted attempts to introduce private companies to the sector in the past.
- However, as the public sector has been unable to get the Bolivian lithium industry off the ground, the government has recently drafted a deal with a Chinese consortium to unlock the potential of its dormant deposits.
- Bolivia is now at risk of missing out on the EV battery boom because of its slow start.
Indian lithium industry:
- Historically, India has had little to no domestic lithium industry. Instead, India was reliant on imports from Hong Kong and China. All of that changed in February with the discovery of massive lithium reserves in Jammu and Kashmir (J&K).
- The estimated reserve of 5.9 billion tonnes would make India one of the world’s largest lithium producers. The Geological Survey of India (GSI) is still in the early phases of testing, but early results on the quality of the lithium are promising.
Challenges:
- The discovery represents an enormous opportunity, but not without associated risks. The lithium in J&K is hard rock, not the brine commonly found in South America.
- Hard rock lithium, the kind typically found in the Eastern hemisphere, requires much more water and electricity to mine and process than the lithium produced from brine.
- Additionally, lithium mining has historically been an exploitative industry that benefits Western manufacturers instead of raw material producers in the Global South.
- India has much to gain from lithium, but it must develop the industry carefully to harmonise the people-profit-planet triple bottom line.
Exploration by Indian firms:
- According to the Mines and Minerals (Development and Regulation) Act, only Indian nationals or firms whose members are Indian nationals are eligible for prospecting licences or mining leases.
- This policy is the first line of defence against a scenario like the one found in Argentina or Chile, where foreign companies extract lithium and only limited benefits of the mining trickle down to the host country.
- To safeguard Indian interests, domestic firms should also process the lithium mined in India. This would further invigorate the local economy and prevent a neo-mercantilist system where Western companies look to India for raw materials and ignore its manufacturing potential.
Australia’s expertise:
- Developing India’s lithium processing sector will likely require outside expertise, especially if the government wants the recently discovered J&K mines to be productive in time to capitalise on the current EV battery boom.
- Australia’s lithium industry is much more mature than India’s, and its reserves are in the same hard rock form as the deposits in India.
- Australia’s expertise in hard rock lithium processing could present an opportunity for technological exchange and an overall strengthening of the mutually beneficial political ties between the two countries.
Environmental impact:
- India must also be cautious about the potential environmental impact of the processing phase. With lithium ore processing, the largest contributor to carbon emissions is the efficiency of the power grid itself.
- Despite India’s sizeable renewable capacity, the Indian power grid still has a relatively high carbon intensity per unit of electricity produced.
- Linking lithium processing plants to the power grid in its current state would therefore result in much higher carbon emissions from the process than usual.
- In addition to its renewable energy targets, the government can also try to mitigate the environmental effects of lithium production by encouraging the construction of plants in regions of India with relatively greener power grids.
Future prospects in India:
- A robust Indian EV battery sector would benefit the country as it moves towards electric vehicles and contribute to export-driven economic growth.
- The government has already begun to encourage the nascent sector by introducing the National Programme on Advanced Chemistry Cell (ACC) Battery Storage as part of the Make in India initiative earlier in 2023.
- The programme will grant over US$2 billion in incentives to EV manufacturing companies like Hyundai Motor India, Reliance Limited, Ola Electric, and Rajesh Exports.
- Equipping the Indian economy for every step in the lithium lifecycle is the best way to ensure that the benefits of Indian lithium mining stay in India, where they belong.
Way Forward:
- Lithium mining has its risks, but the consequences of failing to act in the face of the climate crisis could be even more catastrophic.
- Taking lessons from South America, the Indian government has immense potential to guide the lithium industry down a path that is both sustainable and economically beneficial.
- If the deposits in J&K are responsibly extracted, it could jumpstart the Indian EV battery industry and help lower carbon emissions from cars around the world.
- Even though its lithium will have a global impact, India must ensure that any conversation about lithium mining places the interests of its people and its environment first.
