Lithium mining open to private firms but environmental, social concerns abound

Ashraf Engineer

August 5, 2023


Hello and welcome to All Indians Matter. I am Ashraf Engineer.

The government recently cleared the decks for the entry of private players into the mining of lithium and other deep-seated minerals. The Mines and Mineral (Development and Regulation) Amendment Bill, 2023, removes at least six atomic minerals from a list of 12 which were not allowed to be commercially mined earlier. The most important mineral to be taken off the list was lithium. Lithium is a non-ferrous, alkali metal that is a key component of electric vehicles, batteries and energy storage solutions. Earlier, it was part of the atomic minerals list and its mining was reserved for government entities. The other five minerals that can be mined by private players now are beryl and other beryllium-bearing minerals; niobium (bearing minerals); titanium (bearing minerals and ore); tantalum; and zirconium bearing minerals and ores. Why is India keen on mining them? It’s because they have applications in the space industry, electronics, communications, electric batteries and more. The Bill says that, if India is to achieve its net-zero commitments, these minerals are critical. While the advantages of opening up such mining to the private sector are evident, there are serious environmental concerns too that the government will need to address.


Lithium-ion batteries are used in wind turbines, solar panels and electric vehicles, which are crucial for any economy to turn green. It’s no wonder that a World Bank study predicted that the demand for critical metals such as lithium and cobalt would rise by nearly 500% by 2050. It said that the global electric vehicle market is projected to reach $823.75 billion by 2030, registering a compounded annual growth rate of 18.2% between 2021 and 2030. The Indian market, meanwhile, will register a CAGR of 23.76% by 2028. To achieve this, India needs a steady supply of critical minerals.

As of now, India imports all its lithium from Australia and Argentina, and 70% of its lithium-ion cell requirement from China and Hong Kong.

In 2022-23, India’s lithium import bill was Rs 23,171 crore. In the previous financial year, it was Rs 13,673.15 crore.

The lithium reserves in Jammu and Kashmir could boost India’s domestic battery manufacturing. India has so far declared 5.9 million tons of lithium reserves in the Salal Hamima region in Resai district of Jammu and Kashmir, and further exploration is on. If the estimates about the reserves are accurate, India could even surpass China when it comes to its lithium stockpile. Once auctioned and mined, the reserves would advance India’s plan of 30% EV penetration in private cars, 70% for commercial vehicles and 80% for two and three-wheelers by 2030.

The reserves have geostrategic value too. The transition to net-zero involves critical mineral dependencies. As countries seek to avoid such vulnerabilities, these minerals would get as important as oil and gas are today. So, a dependence on China for lithium and other crucial metals is an energy security risk.

Today, China controls 77% of the global lithium-ion battery manufacturing capacity. That’s why India, the European Union, the US and others are trying to leverage alternative supplies that can challenge China’s dominance.

Since India is China’s main regional rival, India’s energy security considerations are valid, especially at a time when there is a major territorial dispute with China.

The Mines and Mineral (Development and Regulation) Amendment Bill notes the scarcity of critical minerals, their concentration in only a few locations and the potential for supply chain disruptions.

So, the exploration licences will encourage private-sector participation in exploration for critical and deep-seated minerals. These are are difficult and costly to explore and mine, which makes the private sector the key to their extraction.

The government argues that allowing private companies to participate will result in best-in-class technologies used in mining and refining. By locally developing the batteries, costs will fall.

But there is also an opportunity to tap the $300 billion global EV market. If India can scale up production, it can compete with China and South Korea as a supplier of lithium-ion batteries to the world.

That’s the good news. So, what’s the bad news?

The bad news is that there are serious environmental concerns around lithium mining.

Extracting it from hard rock mines, similar to what’s proposed in Jammu and Kashmir, entails open-pit mining followed by roasting the ore using fossil fuels. Estimates say that this means 170 cubic metres of water consumed and 15 tons of carbon dioxide released for every ton of lithium extracted.

The open-pit mining, refining and waste disposal degrades the environment, contaminates waterways and groundwater, negatively impacts biodiversity and pollutes the air.

The Himalaya is the youngest mountain range in the world and is more unstable than older ranges, which could mean incidents of land sinking.

The lessons from Chile, which has one of the world’s largest lithium reserves, are stark. Lithium mining there has meant diverting scarce water resources away from local communities, which has resulted in tremendous socioeconomic disturbances.

While India needs lithium, environmental and social concerns must be factored in before mining is allowed.

Thank you all for listening. Please visit for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at Catch you again soon.