Coal India resumes discussions with Chile to acquire lithium blocks

These talks had previously been halted because the Chilean government required CIL to have prior experience in mineral mining

Coal India Limited (CIL) has resumed talks with Chile to acquire lithium mines, aiming to supply the Indian automotive sector and other industries. These discussions had previously been halted because the Chilean government required CIL to have prior experience in mineral mining, a condition that is being negotiated to be waived off. 

Once this condition is lifted, CIL is expected to sign a memorandum of understanding (MoU) for a joint venture with Chilean companies that will mine lithium on its behalf, a senior official said. 

This initiative comes as India, the world’s largest importer of lithium-ion batteries, relies heavily on imports to meet its domestic demand of 15 Gwh for lithium-ion batteries. They are used in electric vehicles (EVs), consumer electronics such as smartphones and laptops, renewable energy storage, and various industrial applications. According to CareEdge Ratings, this demand is projected to soar to 127 GWh by FY30. 

Between FY19 and FY21, India imported 228,992 units of lithium and 1.68 million units of lithium-ion batteries, costing around ₹26,726 crore, according to official data. 

Earlier, CIL attempted to sign an MoU with Chile for lithium block acquisition. However, it was informed that prior mining experience was necessary, which CIL lacked. 

Queries sent to the CIL spokesperson and the Chilean embassy in New Delhi did not elicit any response. 

Chile is home to around half of the world’s viable lithium reserves and is the second-largest global producer after Australia.

The country is currently developing a policy to auction lithium blocks as part of its national lithium strategy. It is aiming to control production, encourage investment, and promote sustainable resource development. 

This policy involves retaining 50 per cent revenue share from lithium block auctions, a model that may not be financially viable for India. 

Additionally, there is a requirement for companies acquiring lithium blocks to establish production facilities in Chile. “During our visit to Chile for the World Copper Conference last month, we tried to negotiate with the Chilean government to let CIL acquire lithium blocks. Even with a 50 per cent revenue share, along with royalties and taxes, profitability would be limited for us. They have not made a decision yet. We will take a call based on their policy,” the official said. 

The official added that CIL's primary interest is to become a reliable supplier of lithium for the Indian market first. Later, it may be catering to the international market. 

China caters to about India's 75 per cent demand for lithium-ion batteries. 

To meet its target of 50 per cent energy requirement through renewable sources by 2030, India needs a significant increase in EV adoption and grid-level energy storage capacity. 

To reduce reliance on lithium imports, India introduced a production-linked incentive (PLI) scheme for manufacturing advanced chemistry cell batteries in May 2021.