Context: India is negotiating to secure lithium blocks in Australia as it aims to finalise a deal through state owned Khanij Bidesh India Ltd (KABIL). The discussions are reportedly under way for two lithium blocks and three cobalt blocks. 

Significance for India: 

• 2023: India’s KABIL and Australia’s Critical Mineral Office (CMO) signed an MoU to jointly fund project identification and support potential investments by India in Australian critical minerals projects.
• India made its first overseas acquisition of five lithium brine blocks in Argentina. Also, a request for proposal (RFP) to appoint a ‘local partner’ in the Latin American nation has been floated.
• The Geological Survey of India (GSI) announced the presence of 5 lithium reserves in Jammu and Kashmir (Salal-Haimana areas) and Rajasthan (Degana’s Renvat hill and its surrounding areas). 
• Reduce import dependency: 
  • Secure a critical resource for the burgeoning electric vehicle industry and reduce its reliance on Chinese imports.
  • India imported 70 percent of its lithium-ion requirements from China in 2020-21, according to government data.
  • Facilitate supply chain diversification and reduce reliance on China amid strained ties between both countries.
  • The deal with Argentina underscores India’s move to join the Minerals Security Partnership (MSP). MSP seeks to offer an alternative to China’s dominance in mining and processing critical minerals.
• Green Energy shift: 
  • Demand for essential metals like lithium and cobalt is predicted to increase by roughly 500 percent by 2050.
  • Commerce Ministry data: In FY23, lithium imports were at ₹266 crore, up by 62 per cent year-on-year. 
  • The deal is critical to India’s ambitious green energy goals as lithium finds usage in sectors like Electric vehicles, lithium-ion batteries, and mobile phones, among others.
  • The country is striving to reach 500 gigawatt of installed electricity capacity through non-fossil fuel sources by 2030.
• Technical and operational experience:
  • The deal will provide a platform for NALCO, HCL and MECL to understand the technical know-how of lithium exploration and extraction.
  • This is crucial for Indian mining companies given the lack of knowledge/ equipment that persists in the industry.
  • The KPMG report noted that India is still at a nascent stage for mining/exploration of critical minerals. 

Why is Lithium important? 

• Multiple countries have ramped up efforts to find reserves of lithium, sometimes dubbed ‘white gold’, in what has been called the ‘new era gold rush’.
• The grey, shiny, non-ferrous metal is the lightest and the least dense of all metals.
• Being the third element in the periodic table after gases hydrogen and helium, the alkali metal lithium is highly reactive.
• Extensive usage:
  • Besides being used in batteries to power smartphones, laptops and other gadgets, lithium is an essential component in the rechargeable batteries that run electric vehicles (EVs) and in storage batteries for energy from renewable sources. 
  • Its lightness and reactivity make it ideal to facilitate the smooth flow of electrons from the negative to the positive electrode in a battery.
  • Lithium is also used in ceramics, in industrial grease, and in the pharmaceutical sector. 
• As countries move toward clean energy technologies to meet Paris Agreement climate pledges, the transition to electric vehicles is key as vehicular pollution accounts for a significant proportion of carbon emissions. 
  • The U.S. plans to make 50% of its new vehicle fleet electric by 2030.
  • Lithium-ion batteries are said to have a low environmental impact because they do not use substances such as cadmium, lead, and mercury as materials.