India’s quest to tap domestic reserves of critical minerals may not deliver their full commercial benefits before 2031, rendering the country’s manufacturing plans vulnerable to supply shocks for minerals like lithium and cobalt whose global output is controlled by China, rating firm ICRA said on Wednesday.
The lack of critical minerals reserves deemed necessary for India’s green energy transition has resulted in 100% import dependence for minerals like lithium, cobalt, and nickel.
While the government recently began the process to auction 38 blocks of critical minerals, the quality and quantity of lithium resources discovered so far, including those in Jammu and Kashmir (J&K), is inferior to other deposits in key producing regions of the world, ICRA said.
China’s dominance
“China dominates the processing and refining of critical minerals, controlling between 65%-100% of the global capacity to make battery grade lithium, cobalt, manganese, and graphite. Hence, critical mineral supply chains remain exposed to supply shocks from key producing/processing regions, which results in elevated price volatility,” said Girishkumar Kadam, senior VP and group head, corporate sector ratings at ICRA.
Terming efforts to step up domestic production of critical minerals as crucial for energy security, Mr. Kadam noted that the inferior grade of explored domestic ores means that advancement in mineral processing technology would be critical for commercialising these resources.
“However, given the preliminary stage of exploration for most of the domestic blocks being currently auctioned, their commercialisation and associated benefits are unlikely to fully accrue in the current decade ending 2030,” he said.
While the Government is auctioning two lithium blocks in the ongoing auctions, the block in J&K has clay deposits, and the technology to extracting lithium from them remains untested globally, ICRA said. “Given these challenges, the J&K lithium block received less than three bids, resulting in a re-auction of the block,” Mr. Kadam pointed out. The other lithium block being auctioned in Katghora, Chhattisgarh is a hard rock deposit that is expected to see higher competition, the rating agency reckoned.
