The big lithium find: Risks and rewards

What has been found in Jammu & Kashmir?

The government, last Thursday, said it has found 5.9 million tonnes of lithium reserves in Reasi district of Jammu & Kashmir. This may be the seventh largest deposit of the rare element, accounting for roughly 5.7% of all the reserves in the world. They are also said to be of a higher grade—550 parts per million (ppm) against the average 220 ppm—making it highly lucrative, given how lithium prices have soared in the last few years. According to the International Energy Agency, lithium prices went up more than seven-fold between the start of 2021 and May 2022.

Why is lithium so important?

Lithium is a soft, shiny grey metal found in the earth’s crust. Due to its ability to pack energy, it has utility across a range of sectors and has gained the moniker ‘white gold’. It is now primarily used to build the batteries that power modern appliances. They also power electric vehicles, a segment that will corner most of the global lithium production in future. Currently, India does not have its own lithium resources and like crude oil, it is dependent on imports. In fiscal 2022, India imported lithium and lithium ion worth almost ₹14,000 crore. The demand is likely to explode in the future.

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Will batteries be made of lithium from India now?

There is still some way to go before miners can extract lithium for industrial use. The discovery is ‘inferred’ or preliminary, the lowest of the three levels of estimations of a mineral deposit and the second of the four stages of exploration, as per the UN Framework Classification of mineral resources. There is much analysis to be done before its true value is confirmed.

What are the pitfalls of lithium mining?

Just like any mining activity, there are adverse impacts on the environment, including water, soil and air pollution. Extracting lithium from its ore is highly water-intensive, taking about 2.2 million litres of water for one tonne of lithium. The Himalayas are a highly fragile and eco-sensitive region and as the recent Joshimath subsidence shows, it is vulnerable to long-term adverse consequences of unplanned development works. Mining in the region can attract opposition from environmentalists.

Will it mitigate China’s lithium dominance?

China does not have too much lithium reserve of its own, but as the largest market for electric vehicles, it controls both the supply and demand side of the lithium industry. It controls over half the global lithium processing and almost 75% of cell components and battery cell production in the world. In effect, proliferation of EVs could mean India becoming dependent on China, just like it is reliant on the Middle East for crude oil today. J&K’s reserves, however, provide a major opening for India to be self-reliant.