I discuss India's recent discovery of 5.9 million tonnes of lithium in Jammu and Kashmir, which gives India the third-largest reserves of lithium in the world after Chile and Australia. While this is excellent news, the video highlights that India's lack of manufacturing plants means that it cannot take advantage of this discovery yet, & it’s estimated that it will take 5 to 7 years to convert these reserves into commercial use. India needs to invest in infrastructure and technology to extract & utilize these reserves more efficiently. If India can get things right, this discovery could fuel the country's ambition for a greener future.
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[00:00:05] If I could compare countries with children, I'd say India doesn't have rich parents. What I mean by this is we are not in doubt with natural resources, unfortunately. We may have other things going for us such as where a young population, an English speaking
[00:00:21] nation, most parts of our country doesn't have cold weather and a lot more. But barring states like Jharkhand and Odisha were poor in the Natural Resources Department. So you can say we are like that kid who has to make it big through hard work and entrepreneurial ability.
[00:00:39] Which by the way, our people have a lot of. So when we stumble upon such a big find of resources and that to a big stash of rare earth minerals, it's a pretty big deal right? It's like discovering an inheritance we never knew existed.
[00:00:55] So join me for today's video where I tell you how India's discovery of lithium reserves fuels our ambitions for a greener future. But how we shouldn't get our hopes up just as yet.
[00:01:05] And what we need to get right for us to take advantage of this miracle or else we could lose out to China yet again. And guys if you like such videos, please be sure to hit the like and subscribe button for more such financial content.
[00:01:19] First, let me give you a little context. As I mentioned earlier, India doesn't have much natural resources, especially considering our population growth potential. Our natural resources and commodities. We import most of them. And just to remind you, India imports 80% of its crude oil needs.
[00:01:41] This is by far our most expensive import item and drains our budget. Not to mention our foreign exchange reserves as well as plays havoc on our fiscal deficit. And if you want to compare, Russia has it pretty easy that way. Their entire economy runs on export of commodities.
[00:01:58] As one US president put it, Russia is a gas station masquerading as a country. But that aside, last year India imported oil worth $120 billion. This massive figure means that we're literally held ransom by OPEC which sets the price of oil globally.
[00:02:16] What a relief it would be to get rid of our dependence on oil, right? Of course and our government realizes this. It's even working in earnest towards it. Renewable energy is the way to go. You know, power derived from wind, water, solar, hydrogen and electric vehicles.
[00:02:33] But to shift completely to these sources is a very slow process, costs a bomb and takes up a lot of resources. So as a bridge, the BJP government is promoting ethanol in a big way. I'm talking about power required for the transport industry, not households.
[00:02:51] India has set a target to mix 20% ethanol with petrol by 2025 and are also trying to find a binding agent to mix it with diesel. This in itself will save us billions of dollars in oil imports.
[00:03:03] But of course, the eventual goal is shifting completely to electric vehicles in which lithium will play a vital role. A nightmare situation would be if India becomes a net importer of lithium as well
[00:03:15] like oil and that's why this discovery of lithium will go a long way in helping us achieve that target. If we can get a couple of things right, which I'll get to in a bit.
[00:03:25] On 9th Feb 2023, the Ministry of Mines made an announcement via Twitter that it had found a massive 5.9 million tons of lithium reserves in the mountainous Salala Haimana area of Riyasi district in Jammu and Kashmir. A small amount of lithium reserves were found in Karnataka in 2021 as well, about 1600
[00:03:46] tons of it. But that's nothing compared to this recent discovery. Lithium is a rare earth mineral and the main mineral which is used to make rechargeable batteries. Which as you know is used in all electronics from laptops to iPads to smartphones etc.
[00:04:01] But more than that, it's also the most important mineral used in batteries for electric vehicles. And batteries are the most important component in EVs and make up 35-40% of its total cost. Social media and news channels were of course quick to jump on the bandwagon already
[00:04:19] touting India as the next big manufacturing hub for electric vehicles and electronics. But the truth is far from that. What this find of lithium does is that it gives India the third largest reserves of lithium
[00:04:31] in the world after Chile and Australia, sufficient to meet battery manufacturing capacity for the next 50 years. If it can all be extracted and further if it can be turned into producing assets for which we need manufacturing plants which India currently doesn't have.
[00:04:51] More import of lithium increased 55% from 8,811 crores in 2021 to 13,763 crores in 2022 and that figure will keep increasing. At least in the near future. Why? Because at the current pace it's estimated that it'll take 5-7 years before these reserves can be converted into commercial use.
[00:05:14] So I honestly hope that we can come up with a quicker process. Of course investment will be the key. Time to top it all off, I read that out of this 5.9 million tons by the time mining is
[00:05:24] done with only one third or just about 2 million tons would be usable. So again I hope we found a more efficient way to do it. Just to give you some context, the total lithium reserves in the world are estimated at 26 million tons.
[00:05:40] Okay, so before I tell you about the problems we face, let me remind you about the incentives why we should put our best foot forward to take advantage of this massive stash of lithium.
[00:05:51] The biggest incentive is we could rid ourselves of our over dependence on import of oil. Secondly pollution in many Indian cities have reached an alarming level and India has between 4 and 6 of the top 10 most polluted cities in the world, depends on whose ranking you believe.
[00:06:10] So switching over to electric vehicles should be our top priority. Thirdly like I mentioned earlier, currently we are a net importer of lithium which will continue for the next few years but we could become a net exporter if we are able to make use of this fine.
[00:06:27] Quickly I pray. The government through its fame policy is encouraging faster adoption of electric vehicles in India. It even came up with incentives worth 18100 crores in May of 2021 under the PLI scheme to encourage companies to manufacture batteries in India.
[00:06:45] But to truly become Atmanirbar or self-reliant, it is important we develop mineral and raw material processing capability for which we need to set up factories to do. We are already behind on the curve on this front. China has very smartly made itself into the undisputable powerhouse for manufacturing
[00:07:07] batteries. Although they may not be in the top 5 positions when it comes to lithium reserves, in 2020 China had 93 major lithium ion making factories compared with just 4 in USA. Through this infrastructure, China has become the world's factory for lithium ion batteries as well. Which it anyways for everything else.
[00:07:29] It said they have a market share of 75% when it comes to producing lithium ion batteries and can even exert influence over its price. Presently China imports most of its lithium from Australia.
[00:07:41] Just a month or so ago, they signed a deal with Bolivia, which I might add was the world's biggest deal till today, to explore and extract lithium from there. But my concern is if India is unable to ramp up its manufacturing capabilities,
[00:07:56] our new found reserves might just be another source of lithium for the Chinese. And that too, they'll have the convenience of importing it right from their neighbour. Just like how we don't have any factories to manufacture semiconductors, we don't have factories to make lithium either.
[00:08:14] But just how some big companies like Vedanta are in the process of setting up factories to manufacture semiconductors in India, I hope someone makes factories for lithium as well. We need it now more than ever. Our first problem begins with tapping into these resources in the politically volatile
[00:08:32] region of Jammu and Kashmir. Once we move past that, our second problem is who will mine these resources. Indian companies don't have the scale and expertise to run such a complex operation, other than in the oil and gas sector.
[00:08:47] And foreign mining giants have always faced problems in India. Maybe Vedanta or maybe the Adani group will have to finally do it. But this mining aspect of it requires some serious thought. Did you know India imports both copper and aluminium in large quantities despite having abundant reserves?
[00:09:07] That doesn't reflect very well on our mine and minerals industry. That aside, there's also an environmental angle to this. Mining of lithium requires a lot of water and it exerts a destructive toll on the environment and communities.
[00:09:22] Many indigenous communities, especially in parts of South America where there are a lot of lithium reserves, see their surroundings destroyed. And this could be an even bigger problem if minority communities in Jammu and Kashmir begin to protest.
[00:09:37] So all in all, unlike how everyone began to celebrate mindlessly when these lithium reserves were discovered, let's not count our chickens before they are hatched. India still has a long way to go before we are able to commercialize our big fine.
[00:09:52] But I still maintain with enough political will and investment, it's still a doable task. We just need to find a way to do it quickly. And that just boils down to the priorities of our government. Thank you.