Dear Reader,
The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.
Last week, the Geological Survey of India announced that it has found lithium deposits in Reasi district in Jammu and Kashmir. The initial exploration reveals that lithium reserves could be as much as 5.9 million tonnes.
That’s a huge number. It suddenly catapults India to the top five nations with identified lithium resources. According to the US Geological Survey, Bolivia has 21 million tonnes of lithium reserves, followed by Argentina (19 million tonnes, Chile (9.8), Australia (7.3) and China (5.1).
Lithium is crucial for the world’s energy transition away from fossil fuels. Although its key demand is for making batteries (which accounts for three-quarters of the mineral’s consumption), it also has a role to play in clean energy technologies ranging from solar photo voltaic cells to hydrogen. The metal had a white hot rally of 1,200 percent in the two years to November 2022 before prices cooled following dampened demand for EVs in China.
While alternative materials such as sodium and aluminium are in the works for battery technology, these are still in a nascent stage, keeping demand for lithium strong.
In recent years, there have been multiple reports that the world will fall short of lithium supply. In 2021, the worldwide production of lithium carbonate equivalent (LCE) was 540,000 tonnes (this in turn includes around 105,000 tonnes of pure lithium). By 2030, LCE demand is forecast to rise to 3 million tonnes.
As India looks to accelerate EV adoption, its lithium-ion battery demand is expected to rise 13 times to 70GwH by 2030. The country currently imports all its lithium requirements — including raw material and finished products — and spends at least $2 billion annually.
Apart from the import costs, there is the strategic angle to consider in this era of resource nationalism. China, according to some estimates, is said to be controlling around one-third of the world’s lithium resources. That’s not all. It has 70 percent of the world’s lithium processing capacity as well.
That’s the reason why the discovery of lithium in India has sparked jubilation. However, it will be quite some time before the nation becomes self-reliant in the production of lithium and its products.
This discovery by GSI, after all, is just the initial stage of a long process. A couple of more rounds of surveying is needed to establish the ‘proven’ reserves of this mineral. On top of that, it needs technology and equipment to set up lithium refining capacity. It won’t be easy. Lithium mining and refining need a lot of water and impact the environment.
India should take care not to go the way of Bolivia which has the largest reserves and a negligible output of the mineral. While the Centre touted this discovery of lithium deposits as a first in India, others have pointed out that local geologists had spotted this 24 years ago.
To be sure, lithium wasn’t that critical to the world then as it is now. However, the journey to lithium production must not take another 24 years.
For more on this story, read our explainer on this maiden lithium find and revisit our column from last week that argued why India must move quickly to secure its lithium resources.
Investing insights from our research team
Does Adani Ports and SEZ offer value?
Zomato: How does slowing growth affect valuation?
RateGain – What’s next after the recent outperformance?
Should investors bet on the LIC stock?
Lupin: Why avoid despite improving US business
KIMS: Ramp-up of newly acquired entities to be key growth driver
Both FES, auto segments shine for M&M
Crompton Consumer: Weak Q3 not a dampener for long run
West Coast Paper: Q3 FY23 earnings make a strong case for rerating
What else are we reading?
How credible is LIC’s claim to stand tall sans tax crutch?
Going after digital dominance: Can the government get a grip on it?
The Eastern Window: This is how China thinks about Indian policy
Warming up to Web 3 -- How we should play to India’s strengths
How to incentivise pharma research? A ready primer
The untold story of the world’s most resilient currency (republished from the FT)
Will ChatGPT write better novels than humans can?
Thought hiking rates was tough? Wait for the pause
Walking from Kanyakumari to Kashmir has transformed Rahul Gandhi's persona, but he needs allies
Steel scrap recycling faces GST hurdles
Biden 2024? He is already campaigning more than he is governing
Technical Picks: SAIL, TVS Motor, Apollo Hospitals, Godrej Properties, Guar seed and USD-INR (These are published every trading day before markets open and can be read on the app).
Ravi Krishnan Moneycontrol Pro
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
