Over the past three months, there has been lots of buzz around two separate discoveries of lithium reserves. Sadly, one is a distant dream—while the other is fiction. But all that hype disguises a very real anxiety. We are hurtling toward a lithium-fueled world where everyone will be at the mercy of China for their energy needs.
Researched by: Rachel John & Anannya Parekh
Remind me why lithium is a big deal…
The backstory: Until the 1990s, we only had lead and nickel-cadmium batteries. The former are bulky and heavy—and the latter are more compact but inefficient. In the 1970s, scientists started looking at lithium as an alternative—because it is the lightest of all metals. Also this:
“The big advantage of this technology was that lithium-ion stored about 10 times as much energy as lead-acid or 5 times as much as nickel-cadmium,” Dr. Whittingham said. Lithium-ion batteries were also extremely lightweight and required little maintenance.
The rise of lithium: After decades of research, the first commercial lithium battery was rolled out by Sony in 1991. With the advent of the computer and internet revolution, lithium batteries became commonplace in smartphones and laptops. But its popularity has skyrocketed over the past decade—as the world rushes to switch from fossil fuels to green energy. These batteries are essential for electric vehicles—and to store energy from alternative sources like wind and solar.
A precious metal: Lithium today has a new nickname: ‘white gold’. There are only 9.8 million tonnes of viable lithium available in the world right now. A single ton of the stuff sells for Rs 5.7 million (57.36 lakh) in the global market. According to the World Bank, the global demand for lithium metal will increase 500% by 2050. EVs account for a big part of this surge:
The U.S. plans to make 50% of its new vehicle fleet electric by 2030. The EU in October approved a ban on the sale of new petrol and diesel cars from 2035. India has also set a target of 30% sales penetration of EVs in private cars and 80% in two- and three-wheelers by 2030.
The demand curve for the metal, therefore, looks like this:
And we’ve found reserves of this stuff?
Not exactly. We may have significant lithium reserves. Contrary to the breathless media coverage, we don’t have actual confirmation. Let’s take the two big announcements that made headlines in recent months.
The Kashmir ‘find’: In February, the government announced that the country's first lithium reserve has been found in Jammu & Kashmir. The mining secretary declared that an “advanced” study of the Reasi district had determined “the presence of best quality lithium in abundant quantity.” Adding grandly: "India joined a select group of countries at the global level after this finding and it will fulfil the vision of Prime Minister Narendra Modi's 'Aatmanirbhar Bharat'."
But, but, but: The survey was not, in fact, “advanced.” Exploration for any kind of mineral deposit involves four stages. First comes G4—which is the initial reconnaissance of the area. This happened back in 1999—when the Geological Survey of India originally mapped and reported the likely presence of lithium deposits in Kashmir.
In the G3 stage, samples are tested to “infer” the quantity of lithium. At this stage, there is no confirmed evidence of either the size of the reserve or its quality. That requires moving into the G2—or the general exploration phase. We only completed the G3 phase for lithium in Kashmir—the results of which were announced in February:
Pankaj Srivastava, professor of Geology at Jammu University, told Mongabay-India that the G3 exploration in Jammu and Kashmir is preliminary in nature, where the calculation confidence is low. It needs to be backed by more proof to substantiate the quantum of minerals available at such sites. The current study does not indicate whether metal extraction is possible at the site.
Even the G1 stage—which gives us a more accurate sense of size and quality—has to be followed by a feasibility study. So all this self-congratulation is highly premature.
Rajasthan: This was an even bigger reporting debacle (which we unfortunately carried). Earlier this week, a number of national outlets reported a significant discovery of reserves in Rajasthan—even bigger than the deposits in J&K.
The entire media frenzy, however, was based on a single quote from Rajasthan’s state minister for mines, who said: “Recently, the survey completed by GSI in Nagaur’s Degana tehsil has made it clear that there is an abundant reserve of lithium, which is more than Jammu and Kashmir.” Within days the GSI debunked the reports as “baseless”—and said it was merely exploring the area to look for tungsten, lithium and other rare metals.
Point to note: The Rajasthan minister was being no less absurd than the mining secretary who was already making plans to “auction” the lithium reserves in Kashmir.
Sigh! So who has lithium reserves right now?
Lithium, lithium, everywhere: Around 60% of the world’s reserves can be found in the so-called lithium triangle—that encompasses Chile, Argentina, and Bolivia. But lithium deposits are spread across the world. Australia is the biggest supplier at present—producing 52% of the world’s lithium.
Notable reserves have also been discovered throughout Africa—including Zimbabwe, Namibia, Ghana, the Democratic Republic of the Congo and Mali. For example, Zimbabwe is the sixth largest producer of lithium, and could potentially meet 20% of the world’s demand. Even European countries like Portugal and Sweden have reported significant deposits. The global lithium map looks something like this:
Then why is China so dominant?
Because of three reasons:
One: There is a long road between extracting lithium and getting it to the market. The technology and facilities to purify any rare metal into a usable component is expensive. Beijing has already cornered the global market—with an 80-90% monopoly on refining lithium. Others estimate its share as a more modest 58%—but it’s still significant.
Two: China also manufactures 60% of all lithium products in the world and 75% of all lithium batteries—that power the global EV market.
Three: Beijing has moved quickly—way before any Western nation—to buy up global lithium supplies. Chinese groups are behind most of Africa’s lithium mining projects. Last month, Africa’s first Chinese-owned processing plant started up in Zimbabwe—refining deposits from a mine bought back in 2021. China has ploughed in over a billion dollars just in Zimbabwe. As one Western analyst puts it: “It’s not so much fear of the Chinese getting there first. They are there first. It’s already happened.”
FYI: The story is no different in Latin America which promises to be a golden goose of rare metals:
Latin America is front and centre in the race for minerals. It’s just about every single mineral you need to power the modern infrastructure, the green infrastructure that we’re going to need.
And Chinese companies have a huge advantage since Beijing has been investing in trade with these countries for decades.
Also, Afghanistan: The country is often described as an “El Dorado, with mineral riches worth at least $1 trillion.” When the US withdrew from the country, Beijing moved in quickly to establish close ties with the Taliban—and announced a $10 billion lithium deal. Given the abysmal lack of infrastructure and political instability, nothing may come of this relationship. But it allows China to play dog in the manger, according to experts: “The Chinese, at best, will get the contract and sit on it to keep control of the supply and prices of lithium.”
The bottomline: Be it the US, EU or India, we all have a ‘China problem’. Solving it will take a lot more than wishful thinking.
For a solid explainer on the rise of lithium, read BBC News. New York Times traces the development of the lithium battery. BBC News and The Hindu are good on the environmental concerns surrounding the extraction of lithium. The Wire and Mongabay report on the deposits in J&K. As for China, Politico has a decent overview on the challenge for the EU. And CNBC News looks at its presence in Africa. But the better reporting is paywalled—in Financial Times and Foreign Policy.