Body
In a potential game changer for green energy, the Indian government has announced the discovery of a massive amount of lithium, a critical mineral deployed in electric vehicles (EV) and battery storage. The Geological Survey of India estimates it has discovered 5.9 million tons of lithium resources in the mountainous Salal-Haimana area of the Reasi district in the union territory of Jammu and Kashmir.
The find could enhance India’s aspirations of becoming a green industrial power and change the medium- and long-term outlook for lithium availability, helping avoid a lithium access race between the United States and China. The discovery would place India sixth in terms of lithium resources, just behind leading producer Australia and ahead of China, the largest raw lithium importer and producer of lithium-ion batteries (see figure).
But for these benefits to occur, India must address the challenge of tapping this resource in its most politically volatile region, which has been contested in a succession of wars and violent skirmishes between India and Pakistan since they won independence from Great Britain in 1947. Large resource discoveries in “peripheral” regions far from the capital and locus of government power are often politically destabilizing, especially when those resources are discovered in areas dominated by ethnic or religious groups that face significant discrimination.
The news of new lithium deposits is welcome
Globally, mine production hovers around 100,000 metric tons per year. However, the International Energy Agency forecasts that production will need to increase over forty-fold to put the world on a path to net-zero CO2 emissions by 2070. Lithium resources—concentrations of minerals that are potentially economically viable to extract—are not particularly rare. What matters over the medium and near term is how quickly these resources can be developed into reserves, or minerals that are both recoverable and profitably minable in a given price environment.
Many countries with vast lithium resources have yet to begin mining at any appreciable scale (see figure again). Even countries with leading-edge mining sectors and significant domestic resources like Germany currently satisfy all their domestic demand via imports from Australia and Chile, while the United States has only one operational lithium mine. Fears of a “lithium crunch” putting a brake on EV adoption are driven by insufficient mining capacity, not scarcity of lithium resources per se.
The Indian government is keen to bring these resources online as quickly as possible. To reach Prime Minister Narendra Modi’s surprising pledge to reach net-zero carbon emissions by 2070, made at the 2021 United Nations Climate Change Conference (COP26), India will have to significantly boost EV adoption and build solar and wind energy capacity. India is also trying to become an alternative to China as a producer of lithium-ion batteries, both for domestic consumption—India is the world’s fourth-largest auto market—and eventual export. If successful, India could replicate its success in exporting low-displacement motorcycles and scooters and lower-cost agricultural machinery to the developing world.
Until now, one of the key long-term challenges to India’s aspirations appeared to be raw lithium sourcing; the country now has domestic resources capable of meeting current and future demand. Prime Minister Modi has established an ambitious target of energy self-sufficiency for India by 2047, a goal no doubt informed by the depth of India’s energy-import dependence. India is able to satisfy only a small fraction of its oil consumption via domestic production (16.5 percent), less than China (27.4 percent) and Europe (28 percent).[1]
India would still have to rely on global markets for other key inputs like nickel, graphite, and manganese, but domestic sourcing of lithium would be a positive start to building some self-sufficiency in energy production and storage, partially shielding Indian EV makers and battery producers from high import prices. Though down from its peak in November 2022, lithium carbonate is currently trading at nearly fourteen times its pre-pandemic price. Domestic supplies would help insulate India from geopolitical risks of rising tensions between China and the United States.
But the location will pose significant challenges
Developing these lithium resources will require the Indian government to lure investment and industrial development into a politically volatile region in which government authority is contested. The identified lithium reserves sit roughly 30 miles from the Line of Control that separates India-controlled Jammu and Kashmir from Pakistan-controlled Azad (Free) Kashmir. Kashmir is predominantly Muslim, but the lithium deposits are located in the southern Jammu region, a territory of mountains flanking a river valley that is half Muslim and half Hindu. The Hindus accuse the Muslims of driving them out of the area and waging terrorist attacks, with the covert and sometimes overt support of Pakistan. Modi’s government has been accused of waging an anti-Muslim campaign of violence, extrajudicial killings, imprisonments, and other activities condemned by various human rights organizations.
Jammu and Kashmir accounted for just 1 percent of India’s population in 2019 but 57 percent of all deaths due to armed conflict in the country between 2019 and 2021, with local violence rising since Prime Minister Modi was elected in 2014. [2] One armed group, the People’s Anti-Fascist Front (PAFF), has already warned that it will not allow the Indian government to develop the resources. Though the PAFF itself is a minor player, India’s Home Ministry considers it a local proxy for Jaish-e-Mohammed, a Pakistan-based Islamist militant group that reportedly has been responsible for many deadly attacks in the region over the past two decades.
Whether a lithium boom would attenuate or amplify these local governance challenges in hard to anticipate. It could bring significant benefits to the region in the form of employment opportunities and expanded road and rail infrastructure while providing larger economic benefits for the Indian economy. Indian English language media outlets like the Tribune and the Kashmir Image are already running stories touting the find as a solution to the region’s unemployment problems and calling it “the battery of the Indian economy.” The excitement is palpable.
But the downside risks are real. The environmental costs of lithium mining are both high and highly localized, with particular concerns related to groundwater contamination. And large infrastructure projects are often catalysts for conflict in areas where ethnic or religious minorities seek autonomy or self-determination. Prime Minister Modi’s efforts to marginalize and punish Muslims have drawn widespread criticism, and the government’s 2019 decision to revoke Indian-administered Kashmir’s autonomous status was seen as an effort to integrate the region into Hindu-majority India. Under these conditions, resource discoveries can intensify existing conflicts or spark new ones. Modi will need to tread carefully to turn the new lithium resources into a blessing, rather than a curse.
Notes
1. Author’s calculations based on data from the BP Statistical Review of World Energy, July 2021.
2. Author’s calculations based on the Uppsala Conflict Data Program (UCDP) Georeferenced Event Dataset, accessed February 13, 2023.
Data Disclosure
This publication does not include a replication package.
