Recycling should lead India’s quest for critical minerals like lithium
Summary
- Policies are in place but headway needs to be made. Amid a global scramble, the country should work towards a resilient circular supply chain for highly sought-after inputs—especially rare earths.
In response to US President Donald Trump’s tariff war on China, Beijing recently restricted Chinese exports of rare earth minerals like yttrium, dysprosium and terbium, critical minerals used in a wide range of modern-day electronic equipment. This has led to new pressures on the White House, particularly from the US defence, automotive and energy industries, each of which are impacted severely.
The escalation presents an opportunity for India to reassess its critical minerals strategy, which primarily relies on nudging the private sector to invest in unproven reserves and on strategic public sector acquisitions of mines elsewhere in the developing world.
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In February 2023, the Geological Survey of India estimated the presence of 5.9 million tonnes of lithium resources in Jammu. Last year, it confirmed high lithium concentrations in Chhattisgarh. But the initial hype faded quickly. Auctions for the Jammu reserves were unsuccessful because prospective bidders deemed extraction from clay deposits to be commercially unviable.
The Chhattisgarh find fared better; India’s first successful lithium and rare earth auction was won by a Kolkata-based mining company. However, experts note that extracting lithium from lepidolite-based reserves in Chhattisgarh will also be challenging compared to conventional brine deposits. Critical mineral auctions were also held the same year in Tamil Nadu and Jharkhand, which were cancelled for lack of bidder interest.
Similarly, future attempts to secure critical mineral reserves via overseas public sector investments may hit hurdles if failed attempts in oil and gas are anything to go by. ONGC Videsh Ltd (OVL) invested around $2.3 billion in Sudan’s oil sector, but operations came to a halt as the country spiralled towards its present failed-state status. In Venezuela, OVL, along with Indian Oil Corp and Oil India Ltd, partnered with Spain’s Repsol YPF and Malaysia’s Petronas to develop oil fields. The projects struggled under economic mismanagement, US sanctions and political turmoil, rendering them unviable.
It’s clear that India needs a strategic reorientation in its quest to secure critical mineral supplies for the long-term.
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The good news is that it is already half-way there with a growing policy focus on recycling e-waste to recover critical minerals that exist in our devices and batteries. The country generated 1.75 million tonnes of e-waste in 2023–24, a 73% increase in just five years. E-waste often contains discarded lithium-ion batteries, which hold lithium, cobalt and nickel, providing an alternative to mined sources. Unlike mining, which can take a decade-plus to operationalize, recycling facilities can be set up in under a year.
However, scaling up is essential for recycled minerals to become a practical alternative to mining. Research suggests that India’s existing lithium-ion battery recycling capacity is around 61,000 tonnes, equivalent to 15 gigawatt hours (GWh), as of 2024. This quantity of recycled battery material can yield over 3,000 tonnes of lithium carbonate—enough to power over 100,000 electric vehicles. With our domestic recycling capacity projected to reach 543,000 tonnes, or 136GWh, by 2030, it could support over 900,000 EVs.
India has four useful policy frameworks to enable the extraction of critical minerals via recycling. These include ‘extended producer responsibility’ (EPR) rules for entities in the battery value chain, aimed at 90% recovery of EV battery materials by 2027, the National Critical Minerals Mission approved in early 2025, which earmarks ₹1,500 crore to support recycling initiatives. A policy framework proposal for extracting critical minerals from mining tailings and a proposal for a dedicated production-linked incentive scheme for critical-mineral recycling are also being considered.
The country could go further and strengthen its EPR-based battery recycling system by introducing digital tracking to improve traceability and ease end-of-life collection. A tool called a ‘Battery Passport,’ developed by the Global Battery Alliance, maintains a digital record of a battery’s life-cycle all the way from raw material extraction to recycling.
The government could pilot this model in collaboration with battery makers, EV producers, recyclers and mining firms to enhance collection efficiency. India should also promote circular battery designs. Most EV batteries are designed with a focus on performance and time-to-market, often at the expense of recyclability. Government-backed quality assurance mechanisms or third-party certification for recycled battery-grade materials could help standardize supply chains.
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Recycling won’t replace mining anytime soon, but it is vital to India’s critical minerals strategy. While we may have been slow to join the mining race, the potential for competitive growth in the recycling sector is vast. Estimates suggest that China could meet up to 60% of its lithium needs through recycling by 2050. The US and EU will likely follow suit to counter Chinese dominance.
Amid intensifying competition and associated geopolitical risks, India needs a well-balanced mix of scale and innovation to build a resilient circular supply chain for critical minerals.
These are the authors’ personal views.
The authors are, respectively, public policy experts in Koan Advisory Group.
