October 22, 2023

Lithium is in Plate for Whom?

Sudip Dutta

THE Modi government had made a dangerous decision to amend the Mines and Mineral (Development and Regulation) Act in favour of its corporate partners. The revised Act removed lithium and five other minerals from the list of restricted atomic minerals, thereby permitting private entities to engage in mining and exploration. This swift and covertly planned move undoubtedly carries a clear underlying motive.

It is evident that this amendment aims to facilitate the private acquisition of India's recently discovered extensive lithium reserves in Jammu and Kashmir. This was confirmed on September 25, 2023, when the government of India announced its plans to auction these lithium reserves within the coming weeks. Our concerns (explained in an earlier issue of PD dated August 6, 2023) with regard to the suspicious intentions of the Modi government have now been substantiated. Evidently, the neoliberal policies have taken recourse to rapid exploitation of natural resources to support India's crisis-ridden capitalism in the present day.

The prelude to this scheme commenced in February 2023 when the Geological Survey of India officially confirmed that the Salal-Haimana area in the Reasi district of Jammu and Kashmir boasts a staggering 5.9 million metric tonnes of lithium, with an estimated value of 410 billion dollars. This quantity surpasses the reserves held by both the United States of America and China. Furthermore, an ongoing fourth stage of exploration is currently underway in the Panasa-Dugga-Baldhanun-Chakar-Sangarmarg (Saro-da-Bas) region, aimed at uncovering additional lithium reserves.

In the context of the global energy transition, which aims to reduce carbon emissions by 50 per cent by 2030, and with solar energy being the predominant renewable source, the primary challenge lies in electricity storage for use during non-solar hours and ensuring grid stability. Additionally, projections indicate that electric vehicle sales are set to surge to 80 million units by 2030. According to the Central Electricity Authority, India must establish a battery storage capacity of 2.7 megawatts by 2029-30 to meet the growing demand.

Lithium stands at the heart of the production of these energy storage cells, primarily due to its exceptional capacity to store energy relative to its weight, outperforming all other battery materials. Prior to the discovery in Jammu and Kashmir, India relied entirely on foreign nations for lithium imports. Between April and December 2022 alone, India incurred an expenditure of Rs 163 billion on lithium imports.
Remarkably, only a handful of countries, including Bolivia, Argentina, Chile, the United States, Australia, and China, were recognised as possessing this critical resource until recently. With the evolving geopolitics driven by the shift away from fossil fuels, particularly petroleum, nations endowed with strategic lithium reserves are poised to ascend rapidly in the energy resource hierarchy in the coming decades.

When the lithium reserve in Jammu emerged as a hidden treasure vital for India's future energy security, the Indian government unilaterally amended the MMDR Act, enabling private lithium mining. Subsequently, on September 19, 2023, there was a meeting of the consultative committee for the ministry of coal and mines. Astonishingly, during this meeting, the union minister of coal and mines announced that the government would cover 25 per cent of the project cost as an incentive for deep-seated and critical mineral exploration.

It is evident that the government's actions extend beyond merely granting lithium access to its corporate partners through open auctions. To entice them, public funds are being diverted into private accounts under the guise of promoting the development of this critical resource, which is crucial for both the present and the future.

Furthermore, the union power minister recently made a commitment during a corporate group meeting to offer a production-linked incentive (PLI) to private entities for their investments in storage or battery production.

While the Indian government appears eager to handover the country's future energy security to private foreign players, the global approach stands in stark contrast. Many countries are enacting stringent regulations to safeguard their lithium reserves.

For instance, in Chile, lithium is regarded as a strategic resource under complete State control and has been excluded from all mining concessions since 1979. Bolivia, home to the largest lithium deposit, designates lithium as a strategic mineral, and its mining is exclusively managed by the State-owned mining company YLB. Over the past decade, there has been significant public investment, totaling approximately 1 billion dollars. During the recent phase of cathode and battery production industrialisation, YLB initiated a public-private partnership with the government holding a minimum 55 per cent share in profits. However, even then, the Evo Morales government had to cancel the contract due to protests by the people over the agreement's terms.

Currently, YLB oversees the entire process of metal industrialisation, from mining to commercialisation. The State is actively involved in developing lithium extraction technology, processing methods, transfer mechanisms, and technological advancements. The focus of Bolivia's government lithium policy clearly revolves around the rights of local communities, compensating them for the use of their territories and minimising the risk of environmental damage. The extraction of lithium requires substantial energy, disturbs groundwater levels, and contaminates local biodiversity, ecosystems, and communities. It demands a highly cautious extraction process, which can only be ensured by a public sector or government organisation.
However, the Modi government appears to be treading a path dictated by its crony partners. In a bid to appease overseas corporate interests, the union cabinet convened on October 11, 2023, and finalised royalty rates for critical mining. Astonishingly, it approved meager royalty rates for vital minerals, setting them at 3 per cent for lithium and niobium and for rare earth elements merely 1 per cent!

It is worth noting that approximately 100 critical mineral blocks, encompassing resources like lithium, nickel, cobalt, platinum, and rare earth materials, have already been identified. Mineral royalty is essentially the economic rent paid to the sovereign government, which is regarded as the rightful owner of all natural resources. Prior to this notification, the Second Schedule of the MMDR Act mandated an average sale price (ASP)-based royalty rate of 12 per cent for all minerals.

Undoubtedly, it is a stark display of authority and a sign of desperation on the part of the ruling establishment, utilising the tools of primitive accumulation in favour of their corporate allies. Granting a monopoly over this critical global energy resource will empower a select few to reap exorbitant returns on every unit of energy consumed in the future.

Given the adopted rapid transition programme toward renewable energy sources, as underscored in the G-20 Delhi declaration, energy storage capacity is poised to become a linchpin in ensuring the energy stability and security of the nation. The government's actions in handing over lithium to private entities through a series of questionable policies put at risk the fundamental right to energy for the common people. This matter demands exposure, protest, and intervention – a collective outcry to safeguard the right to energy. It is crucial to remember that the resources of India belong to the people of India, not to corporations and their associated governments.