Revoke the Amendment in MMDR Act: Protect the Future of Fuel – Lithium
Sudip Dutta
AMIDST the protests over the burning issue in Manipur, the union minister for coal and mines, Pralhad Joshi, introduced the contentious Mines and Mineral (Development and Regulation) Amendment Bill 2023 on July 26, 2023. Regrettably, the bill was passed hastily, without allowing for any detailed discussion or debate on the floor. The proposed amendments, if enacted into legislation, are likely to have a tremendously disastrous impact on the environment, the well-being of people, as well as India's future energy security and economy.
Proposed amendments in the bill aim to allow environmentally vulnerable activities such as pitting, trenching, drilling, and sub-surface excavation during the preliminary survey process, which are currently prohibited under the Mines and Mineral (Development and Regulation) (MMDR) Act of 1957. Furthermore, the amendment seeks to eliminate the compulsory protective forestry clearance processes designed to conserve flora and fauna in mining regions. Critics raise concerns that these changes may enable private miners to adopt environmentally destructive methods, potentially harming nature and adversely affecting indigenous communities.
The auction process was typically conducted by State governments, except in certain specified cases mentioned under the MMDR Act. However, the bill aims to shift this authority from the states to the central government, granting the centre exclusive rights to conduct auctions for specific critical and strategic minerals such as lithium, cobalt, nickel, phosphate, potash, tin, and phosphate.
The bill grants the central government the authority to issue special exploration licenses for 29 minerals, including gold, silver, copper, cobalt, nickel, lead, potash, and rock phosphate. It also removes six minerals, namely lithium, beryl and beryllium, niobium, titanium, tantallium, and zirconium, from the restricted atomic minerals category list, allowing private entities to participate in mining and exploration activities for these minerals. Notably, the amendment opens up opportunities for commercial mining of lithium, a crucial non-ferrous, alkali metal widely used in electric vehicles, batteries, and energy storage solutions.
Moreover, the central government has taken additional measures to incentivise private corporate participation in mining by excluding duties and levies (ex-mine price), such as GST, export duty, royalty, District Mineral Foundation (DMF), and National Mineral Exploration Trust (NMET), from the calculation of Average Sale Price (ASP) of minerals. These changes in the mining legislation are aimed at attracting private investment and making the exploitation of natural resources more streamlined and accessible.
WHY IS LITHIUM IN FOCUS?
In February of this year, The Geological Survey of India confirmed that the Salal-Haimana area in Reasi district of Jammu and Kashmir holds an astonishing 5.9 million metric tons of lithium valued at approximately 410 billion dollars. This deposit's scale is significant, considering that the world's known lithium reserves, estimated last year by the U.S. Geological Survey, amount to just 80.7 million tons.
By paving the way for private corporate partners, the central government is showing significant interest in exploiting this valuable lithium reserve. India's current dependence on lithium imports is evident, with Rs 163 billion spent on lithium and lithium-ion imports between April-December of 2022-23, with Hong Kong, China, and the US being the top three source countries.
India's proposed lithium reserve equals the entire reserve of the US and surpasses that of China. Presently, 47 per cent of the world's lithium is produced in Australia, 30 per cent in Chile, and 15 per cent in China. The discovery in Reasi has the potential to shift the dynamics of global lithium production and meet India's increasing demand for this essential resource. This remarkable discovery in Reasi becomes even more impressive due to the exceptional quality of the lithium found, surpassing 800 ppm (parts per million). Any lithium mineral with a quality exceeding 300 ppm is deemed to possess excellent enrichment value.
As the Modi government relentlessly pushes towards transitioning to private renewable energy, lithium is emerging as the most crucial element for future fuel. According to NITI Aayog, electric vehicle sales are projected to soar to 80 million by 2030 from the 1.3 million sales reported until July 2022. Additionally, the Central Electricity Authority (CEA) predicts that India will have a battery storage capacity of 2.7 Megawatts by 2029-30. In response, electricity regulations are undergoing modifications to foster flourishing opportunities for energy storage, making lithium an indispensable input material for these projects.
However, the auctioning of mining rights to select private corporations implies granting monopoly control over the vital future energy resources of the country. As a result, private corporate entities could wield significant influence over the essential resources needed for India's energy transition.
The World Bank has predicted a staggering 500 per cent rise in demand for critical metals like lithium and cobalt by 2050. The global electric vehicle market is expected to reach 823.75 billion dollars by 2030, with a Compound Annual Growth Rate (CAGR) of 18.2 per cent from 2021 to 2030. In India, the electric vehicle market is projected to register a CAGR of 23.76 per cent by 2028.
Lithium batteries used in electric two-wheelers typically consist of around 100-200 lithium cells. These cells contain elements such as lithium, cobalt, manganese, nickel, copper, graphite, and others. For example, an average electric car's battery pack requires 8 kg of lithium. Given India's extractable lithium reserves, the country has the potential to produce a remarkable 725 million electric cars!
Imagine the benefits this resource could bring to society if it had been harnessed and utilised by the government through the public sector. Such an approach could have a profound positive impact on all sections of society.
WHY DO AWAY WITH ENVIRONMENTAL PROTECTIONS?
The proposed method of extracting lithium in the Jammu and Kashmir sector involves open-pit mining, followed by roasting the ore using fossil fuels. This process, along with refining and waste disposal, inflicts significant damage on the environment, leading to waterway and groundwater depletion and contamination, loss of biodiversity, and substantial air pollution. This approach stands in stark contrast to the mining process employed in Australia.
Australian lithium-bearing pegmatite deposits are found in stable geological regions, the Pilbara and Yilgarn cratons, with continental rocks that have remained stable for over a billion years. In contrast, the Himalayas are the youngest and one of the most unstable mountain ranges globally. The extraction of one tonne of lithium requires approximately 2.2 million liters of water and releases 15 tonnes of CO2, making it an environmentally demanding process.
Moreover, the lithium store in India is situated in densely populated areas, making it even more critical for the exploration to receive special attention and strict regulation from the government. Government agencies would be best equipped to manage such a valuable resource responsibly. However, the Modi government seems eager to expedite the handover of this rare asset to private entities with close connections, raising concerns about transparency and the potential negative impact on the environment.
The South American 'lithium triangle' comprising Bolivia, Chile, and Argentina holds approximately 50 per cent of the world's known lithium reserves. In Bolivia and Chile, lithium extraction rights are either controlled by the state or are managed through joint ventures involving state-owned companies and private entities.
In contrast, Mexico took a dramatic step in April 2022 by passing a law to create a state-owned entity responsible for extracting, processing, and selling lithium. The law also banned direct private investment and production in the lithium sector. Similarly, in August 2022, Chile's environmental regulators imposed a fine of 52 million dollars on the private lithium miner SQM for environmental violations, following prolonged advocacy efforts by indigenous groups.
Global experiences indicate a trend towards state-run agencies with stringent environmental regulations in the lithium mining sector. However, the Modi government has introduced a bill that relaxes these restrictions for corporate entities, including making the District Mineral Foundation (DMF) inoperative.
Handing over the right to lithium mining to commercial miners risks compromising India's future energy security to local and international private corporate interests. If the government were to extract this substantial source of lithium and use it for its own renewable energy production, it could facilitate an effective energy transition under the control and dominance of the public sector.
This bill jeopardises the country's future energy security, ecological sustainability, and the well-being of people in the affected regions. Additionally, the Forest (Conservation) Amendment Bill, 2023, further raises apprehensions. Private companies may exploit natural resources with little regard for the environment and local communities, leaving the nation to bear the burden of their unrestrained pursuit of profit. This bill appears to be against the interests of the people, nature, and the nation, and it is likely to face resistance within and outside the parliament.
