Explained: How J&K's lithium find can be India's white oil moment

So far, the one claim to fame for the Reasi district of Jammu & Kashmir had been the Salal Hydro­el­ectric Power Station on the Chenab river. It was the first hy­dr­opower project in J&K, under the Indus Waters Treaty Regi­me, completed 35 years ago.

Last week, Reasi sprang into national consciousness again when the Geological Survey of India (GSI) announced the Salal-Haimana area in Reasi could be sitting on 5.99 million tonnes of lithium reserves. The question is, can Reasi now barge into global consciousness by helping India become a force in electric vehicles? That depends on a lot of factors.

In the modern world, as gadgets powered by batteries changed the way we lived, worked, and played, lithium became a much sought-after material as a vital component for their batteries. Now, as electric vehicles promise to change the way we travel, lithium has become more important than ever.

The discovery in Salal Haimana gives India the third largest reserves of lithium after Chile and Australia, sufficient enough to meet the country’s lithium ion cell manufacturing needs for the next 50 years, say experts. If the entire 5.99 million tonnes turns out to be is extractable, it can support 10 TWh (terawatt-hour) of lithium ion cell manufacturing. This can be compared to the current demand of lithium ion batteries of 3 gigawatt hour (GWh), which is projected to touch 20 GWh by 2026 and 70 GWh by 2030, according to a report by Arthur D Little.

“India can now push itself as a cell manufacturing hub,” said Mahesh Godi, Founder and chief executive officer of Godi India, the first Indian company to get BIS certification to sell lithium-ion cells made with home-grown technology. India has set an EV sales penetration target of 30 per cent for private cars, 70 per cent for commercial cars, 40 per cent for buses, and 80 per cent for two- and three-wheelers by 2030. That makes this discovery critical to India’s targets of meeting its climate-related commitments.

The discovery also has the potential to change the dynamics of the global lithium market. A report by the International Energy Agency says more than half of lithium, cobalt and graphite processing and refining capacity is located in China. The fear that India may become a net importer of lithium resources, just as it is of crude oil, may well be dispelled if the Salal Haimana reserves turn into producing assets.

India’s lithium ion imports increased by 55 per cent in value terms from Rs 8,811 crore in 2020-21 to Rs 13,673 crore in 2021-22. Significantly, during April to November of the current financial year, this jumped further to Rs 14,239 crore.

“We do not have lithium ion manufacturing plants in India as of now. The current findings are going to be a game changer for India,” said Ankit Mittal, co-founder and chief executive officer of energy storage company Sheru.

Between 2016 and 2021, GSI carried out surveys on lithium and associated elements in states such as Bihar, Chhattisgarh, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Madhya Pradesh, Meghalaya, Karnataka and Rajasthan. In 2021-22, GSI took up five projects on Lithium and associated minerals in Arunachal Pradesh, Andhra Pradesh, Chhattisgarh, Jammu and Kashmir and Rajasthan.

Industry experts told Business Standard these states appeared to have a good amount of reserves, which could make India one of the largest hubs in the world. On the question of how much of these reserves are realistically recoverable, an industry expert said at present it was in the G3 stage, meaning initial assessment, where the finding was confirmed. Its commercial viability will be proven in the G2 and G1 stages. This could take five to seven years.

If all goes well, India will gain from the rise in global lithium prices. “Lithium Carbonate and Lithium Hydroxide prices increased from less than $10,000 per tonne in 2020 to more than $80,000 per tonne in 2022-23. This is a huge pressure on lithium ion cell cost, pushing up the costs of electric vehicles. This discovery can make India a hub of low-cost cell manufacturing and enable faster adoption of electrical vehicles in the country.

“India can now push for a 100 per cent electrification target of transportation by 2035,” Godi added.

If that happens, it will herald a new era for India, dispensing with its dependence on oil imports for transport. After all, it’s not for nothing that lithium is called white oil.

Charging Up
 

The current demand of lithium ion batteries, around 3 gigawatt hour (GWh), is projected to touch around 20 GWh by 2026 and 70 GWh by 2030

Between 2016 and 2021, GSI has carried out surveys on lithium and associated elements in states like Bihar, Chhattisgarh, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Madhya Pradesh, Meghalaya, Karnataka and Rajasthan

The finding in J&K is in the G3 stage (initial assessment), in G2 and G1 stages its commercial viability can be assessed