Lithium: The New Gold

Over the past few decades, the technological sector has been the pioneer of innovation as well as economic growth. The fact is only further proved when we look at the indices of various stock exchanges across the world, and see that it has been companies like Microsoft, Facebook, Google, Amazon and Apple that have generated huge returns for their investors, and have been continuing to do so regardless of the impositions of Anti-Trust Laws on their functioning.

In a world where innovation is God and science the biggest most proliferated religion, the very makings of these institutions and the entire sector as a whole is about to achieve the status of becoming in itself a commodity that shall be highly heralded in the coming future: Lithium.

From rechargeable batteries from our phones and in electric cars, to being used in medical equipment like pacemakers, Lithium is all set to become one of the highly prized elements in the coming future, since the demand for newer and contemporary technological products will only be reaching higher levels in the coming future.

As of the past year of 2020, the demand of lithium had been around 45,000 metric tonnes with the demand expecting to triple or even quadruple by a few estimates to around 150,000 units over a period of 5 years, i.e. till 2025. Furthermore, this demand for lithium will be safely supported by an increase in lithium mining, derivation and production over these next few years.

The largest producers of Lithium are also its largest exporters. Australia is at the very top of the list, with a lithium production level of 42,000 tonnes, even though Australia has only the fifth largest deposit of lithium ores in the world. Chile follows in at the second position, with producing 18,000 tonnes in 2019, which has enabled to earn approximately a billion dollars ($949 million by some accurate estimates) by its subsequent exports.

Sine lithium is expected to be able to satisfy and enable the growing demand over the next few years as more stress will be put on the use of Electric Vehicles across various countries which have already initiated their approach towards the building of a sustainable economy, like India, China, Japan, majority of the Nordic countries like Norway, Sweden and Finland, and by some estimates, even the United States of America.

So, if in the next few years Lithium takes off, who will be the one who shall benefit the most? The answer is quite tricky, since majority of the variables haven’t yet even presented themselves within the fray, but an idea of the general direction can be drawn well enough

Not surprisingly, China will be one of the countries that shall benefit most from the Lithium boom, since it is part of one of the largest importers of Lithium (along with Japan and South Korea) aside from its own domestic production. And since it has been lowering its subsidies over the years than rather eliminate them in a single swipe, this shall provide a much-needed impetus towards the boost of the domestic sale of EVs in their domestic economy.

China shall lead the demand for Lithium in the foreseeable future, facilitated by an increase in manufacturing facilities from approximately 400GWh in 2020 to approximately 600GWh in 2024, with a further emphasis of making EV sales account for 20% of the total automobile sales by 2024.

Tesla, on the other hand, is gearing up to introduce higher levels of innovation in its automobile manufacturing sector by increasing the lifespan of the batteries being used in their vehicles. Panasonic, which is one of the key suppliers of Tesla, is expected to increase its facilitation of Lithium from 40GWh in 2019 to 63GWh in 2021. This increase in demand had been facilitated by Elon Musk’s announcement on September 22 this year, by saying that the company aims to achieve 100GWh of battery production by 2022, and upto 3000Gwh by 2030.

So, after taking into account two of the largest economies in the fray, with one being rushed forward by private ventures and the other by the multi-pronged approach of the state itself, where does it leave India and its position in the future world events of renewable energy consumption?

As of March 2020, the number of registered EVs in India only stood at a mere 500,000, with the EV industry being in its nascent stages. According to estimates, India will need to pump in $10 billion by FY30 if it wants to increase the infrastructure and demand for EVs to promote a much more sustainable economy. Given the all-time high prices of petrol and diesel, switching towards EV is a fundamentally and financially a sound investment, with the lower costs of purchase and recharging giving a double bang for the buck

Furthermore, India’s future regarding Lithium is one that has strong elements of speculation within it. Nevertheless, it has launched a massive mission to counter Chinese dominance in the Lithium market. This mission will have need to be worked on from three major angles

  1. Production and procurement of Lithium to make itself self-reliant
  2. Developing peripheral and key infrastructure facilities like Lithium refineries
  3. Leverage multi-nation alliances to emerge as one of the largest producers on the global scale

For the procurement of Lithium, India has gained access to the Lithium Triangle: An area of vast swathes of Lithium deposits encompassing the countries of Chile, Bolivia and Argentina in South America. The access has been gained by receiving the rights of the part of the triangle that is under the jurisdiction of Bolivia. Furthermore, India has also strong ties with Australia, which is the largest producer of Lithium in the world.

A new company named Khanij Bidesh India Limited has been formed by the incorporation of the three state owned companies of Hindustan Copper, NALCO and Mineral Exploration Limited in order to facilitate this Lithium powered approach of becoming self-reliant. Its mandate is extremely focused, since it shall only aim and facilitate acquisitions based on the minerals of Lithium and Cobalt, which are the key elements of building batteries.

To facilitate the building of refineries, a state-owned company shall invest a sum total of Rs 1,000 Crores into a factory that shall be built in Gujrat, which shall function by extracting Lithium from its ores, and converting it into the suitable specifications for building electric batteries.

As for the leveraging of multinational levels, China currently dominates the cell manufacturing capacity by a whopping 73% at the global level. However, since countries across the world want to combat Chinese influence in the renewable sector, Australia is more than willing to sign partnerships with India, thereby allowing it to increase its aggressive approach of entering the renewable energies sector.

As of last year, India had been importing Lithium-ion batteries amounting upto a sum total of $1.2 billion in 2019-20, of which the majority proceeds had went to China since India was importing the batteries from China itself.

Given this dominance of China in the renewables sector, the entire world is hinging on curbing that influence and making it a free and fair market with properly established regulation and multilateral agreements between various countries that shall influence heavily the usage of Lithium in the coming years.

However, Lithium makes up only a minuscule part of the Earth’s deposit of minerals, and that too is controlled by countries that are geographically spread out for India’s reach. Furthermore, the drive to combat Chinese influence will need significant amounts of investment over the next two decades just to come close to China’s current levels of production, which is not a good indicator for India’s current position. Nevertheless, India and its allies are keen on curbing this influence, and are depending on India to do so.

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