India has taken a major step towards securing its lithium supply chain by signing an agreement with Argentina’s state-owned mining and energy company to explore and develop five lithium blocks in the Catamarca region. The deal, which is the first-ever lithium exploration project initiated by India, is expected to save the country ₹24,000 crore in import costs and boost its electric vehicle (EV) industry.
Background
Lithium is a critical mineral for the energy transition as it is used in batteries for EVs and other devices. However, India has limited domestic reserves of lithium and relies heavily on imports, mostly from China, which dominates the global lithium market. According to data from the Ministry of Commerce and Industry, India imported lithium worth over ₹6,000 crore in 2020-21, including ₹3,500 crore worth from China.
To reduce its dependence on imports and diversify its supply sources, India formed Khanij Bidesh India Ltd (KABIL) in 2019 as a joint venture of state-run miners NALCO, Hindustan Copper Ltd (HCL) and Mineral Exploration Corporation Ltd (MECL). KABIL’s mandate is to source strategic minerals such as lithium and cobalt from abroad. KABIL has signed three MoUs with Argentina’s state-run companies JEMSE, CAMYEN and YPF for lithium exploration and development.
The Deal
On January 15, 2024, KABIL and CAMYEN signed an agreement for the exploration and development of five lithium brine blocks, spread around 15,703 hectare in Argentina’s Catamarca province. KABIL will infuse ₹200 crore into the project and is also preparing to set up a branch office. The agreement gives KABIL exclusive rights for the exploration and development of the blocks.
The deal will provide a platform for NALCO, HCL and MECL to understand the technical know-how of exploration and extraction of lithium, a key mineral used in batteries. The deal will also facilitate the diversification of supply chain for critical materials towards achieving Global Net Zero goals, said Coal and Mines Minister Prahlad Joshi.
Benefits
The agreement is expected to bring multiple benefits for India, such as:
- Reducing import costs: According to KABIL’s estimates, the project can save India ₹24,000 crore in import costs over a period of 10 years.
- Boosting EV industry: The project can help India meet its growing demand for lithium batteries for EVs and other devices. India aims to achieve 30 percent EV penetration by 2030.
- Enhancing bilateral ties: The project can strengthen India’s strategic partnership with Argentina, which is one of the largest producers of lithium in the world. Argentina forms part of the ‘Lithium Triangle’ in the Andes with Bolivia and Chile, which holds more than half of the world’s lithium reserves.
- Advancing energy transition: The project can support India’s efforts to achieve its climate goals and transition to clean energy sources. India has pledged to reduce its carbon emissions by 35 percent by 2030 and achieve net zero emissions by 2070.