OIL targets LatAm lithium; govt weighs soft finance, quicker nods

State-run Oil India (OIL) is evaluating critical mineral blocks in Latin America, preparing offers to acquire lithium-rich areas — key to India’s net-zero journey and a major supply choke point — industry sources told Business Standard. India is entirely import-dependent for lithium, making mineral security a critical pillar in the country’s energy transition plan.

 

A team from OIL — the first state-run oil firm to set up a dedicated department for critical minerals — visited the so-called Lithium Triangle last month. The region, comprising Argentina, Bolivia, and Chile, is a global hotspot for lithium exploration. The team assessed assets at various stages of development under a government-to-government initiative to prepare non-binding acquisition offers, sources said.

 

“As part of our diversification strategy, and aligned with national priorities for building a critical minerals ecosystem, we have secured two composite licences — one graphite and vanadium block in Arunachal Pradesh and one potash block in Rajasthan,” OIL Chairman and Managing Director Ranjit Rath told Business Standard. “We are also pursuing overseas acquisitions in collaboration with other public sector undertakings (PSUs).” 

 

OIL is working with other state-run entities such as Oil and Natural Gas Corporation and Coal India to assess overseas opportunities, sources said. Rath, an alumnus of IIT Bombay and IIT Kharagpur, declined to comment on specific deals, citing non-disclosure agreements. He did not divulge how much the company has earmarked for investments in critical minerals of the over ₹7,000 crores dedicated for oil and gas this fiscal.

 

On the domestic front, OIL has discovered lithium in oilfield brines — saline water produced during oil and gas extraction — in Rajasthan, according to internal company documents. Sources said that it was an important find, containing 55 to 66ppm (55 to 66 milligrams per liter) of lithium, around half of what the Latin American deposots hold. But the deposit in Rajasthan is viable, an expert in critical minerals said.

 

Separately, the government is reviewing a proposal from India Exim Bank to create an empowered committee focused on overseas critical mineral investments, with the bank included as a member, according to an Exim Bank document and officials familiar with the matter.

 

The bank has also proposed a concessional financing scheme to support Indian companies bidding for overseas critical mineral projects, such as those being evaluated by OIL.

 

 

“Given the involvement of multiple government agencies in the mining sector, it’s important to have a single empowered committee to coordinate overseas investments in critical minerals,” the document said.

 

India’s hunt for critical minerals, particularly rare earths used in magnets, a sore point for the country’s automakers, is still in its infancy. In contrast, China has locked up much of the world’s known deposits and has a stranglehold in processing.

 

In early 2023, Chinese firms spent $10 billion acquiring overseas mines, focusing on battery-related minerals like lithium, nickel, and cobalt. In the 2020-23 period China spent $6 billion in lithium projects overseas, six times more than what Europe spent. Between 2000 and 2021, the Chinese government and its state-owned entities extended one grant worth $9 million and 93 loan commitments adding up to $56.9 billion across 19 low- and middle-income countries to secure five key transition minerals. India hardly spent anything.

 

Perhaps given the chasm it needs to traverse to catch up with China, the Cabinet, in January 2025,  approved the National Critical Mineral Mission, announced earlier in the 2024-25 Union Budget. The mission has an allocation of ₹16,300 crore, with PSUs expected to invest an ₹18,000 crore. The total outlay over 2024-25 to 2030-31 stands at ₹34,300 crore.

 

Lithium, an alkali metal, is extracted from hard rock in Australia and from brines — salty groundwater reservoirs — in South America’s Lithium Triangle. The mineral, originally secreted by volcanic activity, accumulated in lakes over millennia. As the lakes dried, lithium percolated underground. Unlike oil and gas, critical minerals are found in low concentrations, often making projects marginally profitable. Lithium is typically found in underground brines, mineral ores, hard rock (pegmatite), seawater, clay-based sedimentary deposits, and geothermal wells.