What the lithium discovery means

Lithium is the lightest metal and is highly reactive, with excellent heat and electrical conductivity.

lithium, jammu and kashmir
The Centre estimates that the reserves in Reasi district of Jammu & Kashmir could be of ~5.9 million tonne. (IE)

The discovery of lithium reserves in Jammu and Kashmir has sparked a lot of excitement in the country, given the seminal role the metal will play in the economy of the future — it is key to building battery-storage capacity. Sarthak Ray takes a look at the promise the discovery holds and the challenges ahead for its realisation

Lithium and its uses

Lithium is the lightest metal and is highly reactive, with excellent heat and electrical conductivity. Because of its reactive nature, it is found as a constituent of some compounds —the most marketed compound is lithium carbonate, which is very stable. Lithium salts are found in underground clay, mineral ore, natural brine, geothermal springs and seawater. However, the lithium that we use is mostly terrestrially mined.

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Because it is light and conducts electricity rather well, lithium is a key electrode for the power-storage industry — appearing as the ubiquitous lithium-ion (Li-ion) battery. Easy portability, higher durability and efficiency is behind lithium batteries’ dominance of the gadget-battery market. Smartphones, laptops, tablets, all depend on Li-ion batteries.

India’s discovery

The Centre estimates that the reserves in Reasi district of Jammu & Kashmir could be of ~5.9 million tonne. However, this is currently in the ‘inferred’ category — that is the quantity and quality have been estimated on the basis of very limited geological evidence and sampling. The survey by the Geological Survey of India (GSI), based on which the Centre made the ‘inferred’ resource projection, was ‘preliminary exploration’ (G3), which came after 25 years of the ‘reconnaissance survey’ (G4). Now, India must wait for ‘general exploration’ (G2) and ‘detailed exploration’ (G1, for more accurate estimates of the reserve. Eventual mining will need green clearances, tendering, etc. All this means it could take years before the reserves are meaningfully extracted.

Meanwhile, India continues to be heavily reliant on imports, especially from China and Taiwan.

Lithium rush

A country’s lithium resources are very different from its reserves (that are extractable). Chile (third-richest in terms of lithium resources) has the largest known reserves, at 9.3 million tonne. Australia and China also have large reserves. Thanks to issues of extractability, the global Li market is controlled by only a few companies.

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That aside, countries have also drafted policies in the past to tighten their holds over lithium supply. Chile has rather tight restrictions on foreign exploitation of lithium, listing it as a strategically important resource. In the past, China restricted its lithium supply to Japan through high export tariffs, to choke competition in the high-tech industry; but in 2012, the WTO stopped China from resorting to such measures. However, close to half of lithium mining is done by China’s Tianqi, which has operations in other Li geographies including Chile, where it acquired close to 24% in SQM, the a major producer in the LatAm nation.

What is driving the current demand for the metal?

Thanks to climate change, many countries are keen on increased adoption of electric vehicles (EVs) and renewable power to reduce reliance on fossil fuels. This shift comes with a concomitant demand for power storage solutions (batteries for EVs, to store renewable energy for transmission at a later stage, etc). To illustrate, China produced nearly 300,000 EVs every month in 2021. Lithium is also used in manufacture of heat-resistant glass, ceramics, industrial greases, and, of course, the gadgets that we use. Thus, demand is booming.

Research on more accessible alternatives — such as sodium-ion, zinc, and iron batteries — is ongoing, but lithium is likely to remain dominant for a few decades more. By 2025, demand is projected to touch ~1.3 million tonne of LCE (lithium carbonate equivalent) — nearly 1.8x the estimated demand in 2022 (724,000 tonne).

The top lithium importing nations in 2021 were China (37% of the world imports, at $562 million), Korea (25%, at $384 million), Japan (13.9%, at $206 million), and the US (5.43%, at $80 million). A large part of China’s imports are fuelled by China’s five-year plan that focuses on becoming the world leader in production of EVs. Given the booming demand, prices doubled last year from the year before.

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First published on: 04-03-2023 at 03:25 IST
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