India Signs Landmark $24 million Deal for Electric Vehicle Self-reliance

India signs pact with Argentina for lithium exploration

India has signed a landmark $24 million agreement with Argentina for rights to develop lithium mines in the South American country. As per the pact between state-run Khanij Bidesh India Ltd (KABIL) and Argentina’s Catamarca Minera Y Energtica Sociedad Del Estado (CAMYEN), India will get exploration and production rights for 5 lithium blocks in Catamarca, Argentina. This is India’s first-ever overseas lithium exploration project through a public sector company.

The deal aims to boost India’s energy security by reducing dependency on China for lithium, a critical mineral that is a key component in electric vehicle batteries and energy storage. India imported $33 million worth lithium in 2022-23, of which over two-thirds came from China. According to a 2011 study published in the Journal of Industrial Ecology by Gruber et al., global lithium demand is expected to rise over 40 times by 2040. Securing alternative long-term supplies is therefore vital for India’s renewable energy and electric mobility goals.

What are the details of the Deal?

The lithium mining agreement was signed between Khanij Bidesh India Ltd (KABIL) and Catamarca Minera Y Energtica Sociedad Del Estado (CAMYEN), a provincial mining company in Argentina’s Catamarca region.

As per the deal, KABIL has received exclusive rights to explore, evaluate and extract lithium across 5 blocks spanning 15,703 hectares in Catamarca. This includes critical operations such as prospecting potential sites, discovery drilling and commercial development of any lithium reserves.

The estimated project cost is Rs 200 crore, according to official statements from the Ministry of Mines. Securing overseas lithium assets is a key priority for KABIL since its inception in 2019 to ensure mineral supply security for India’s renewable energy and e-mobility vision.

The deal gains significance as Argentina is part of the Lithium Triangle along with Chile and Bolivia, a region endowed with over half of global lithium resources, according to a 2022 study published in Mineral Economics by Petavratzi et al. This first-of-its-kind state-driven overseas exploration project reinforces India’s self-reliance efforts for strategic minerals.

What is the importance of Lithium for Indian economy?

Often referred to as “white gold” for its market value and silver tint, lithium is amongst the most coveted metals worldwide owing to its indispensability for electric vehicles (EVs) and renewables storage. A 2021 review published in Minerals Engineering by Baltazar Tabelin et al. highlights that lithium is critical for transitioning towards a low-carbon society, but there are challenges in terms of resource availability, mining, extraction and recycling that need to be addressed through innovation.

As per Indian government trade figures published in Press Information Bureau (PIB) of India, lithium imports touched $33 million in fiscal 2022-23. Over 67% of India’s lithium came from China. However, surging global lithium demand driven by EVs and batteries presents risks for import reliance.

According to a 2011 study published in the Journal of Industrial Ecology, worldwide lithium demand is estimated to grow more than 40 fold from current levels to support the global net zero emissions push by 2040. By virtue of its lightweight properties and electrochemical stability, lithium-ion batteries power every major EV manufacturer’s offerings and grid-scale facilities.

Therefore, the Argentina deal and domestic survey efforts underscore India’s strategic imperative to build self-reliance across the lithium value chain – from securing access to ore reserves and refining capacity to battery production and recycling technologies.

India’s Electric Vehicle Push

India harbors ambitious policy targets for rapid electrification of mobility. The Indian government’s Ministry of Road Transport and Highways has announced that by 2030, India aims that electric vehicles account for 30% of private cars, 70% of commercial vehicles, and 80% of two and three-wheelers.

Achieving these goals necessitates public and private investments across the entire EV ecosystem – from lithium cell manufacturing to battery assembly plants and charging infrastructure.

According to estimates, India’s lithium demand for only meeting the 2030 EV penetration target would be over 75,000 tonnes as reported in the Roskill market report. As the Argentina deal unlocks new lithium capacity for India, it will catalyze growth of ancillary industries spanning lithium refining, cell fabrication and battery manufacturing.

Specifically, the project offers an early mover advantage for Indian companies to build technical expertise in lithium exploration and upstream processing – areas where global lithium majors dominate. As reported in “Forecasting Penetration of Electric Two-Wheelers in India: A Bottom-Up Analysis” by Niti Ayog, such integrated capacities will strengthen India’s self-reliance and save foreign currency on EV imports valued $1.5 billion in 2021-22.

What is KABIL?

Khanij Bidesh India Ltd (KABIL) is a specialized company formed in 2019 via a joint venture between state-owned National Aluminium Company Limited (NALCO), Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Limited (MECL).

Headquartered in New Delhi, KABIL has an explicit mandate to target overseas mineral assets considered strategic for India’s energy security and high-tech manufacturing priorities.

As the country lacks adequate natural reserves of lithium and cobalt, securing rights over such overseas resources is pivotal to attract global supply chains related to electric mobility and renewable energy sectors aligned with India’s net zero pledge.

Specifically, KABIL specializes in identifying geographies with substantial lithium and cobalt deposits and negotiating agreements with host countries for exploration licenses and mining rights to enable indigenous production over the long-term.

The Argentina deal also opens up avenues for KABIL to build in-house technical expertise in critical mineral exploration by partnering with leading local players in resource-rich nations.

What is Lithium Triangle?

The Lithium Triangle refers to a resource-rich Latin American territory encompassing Argentina, Chile and Bolivia – countries that collectively hold over half of global lithium reserves.

Specifically, latest mining surveys estimate Argentina’s total lithium resources at 19.3 million metric tonnes – the second largest globally after Bolivia. According to Barandiaran’s 2019 report “Lithium and development imaginaries in Chile, Argentina and Bolivia” published in World Development, Argentina has proven extractable lithium reserves of 3 million tonnes, ranking behind Chile which leads with 9.6 million tonnes.