Critical mineral imports: The devil is in the details

In part 2 of the series on critical minerals in India, CarbonCopy explores how India’s efforts to secure supplies is faring.

Read the first and third part here

In 2019, Anjani Sri Mourya Sunkavalli found his plans unravelling. 

Since 2016, the founder of Allox (Now Altmin) had been trying to secure lithium supplies for a CAM (cathode active material) plant he and his colleagues wanted to set up in Telangana. He had reached out to Bolivia’s ambassadors in India. Travelling to the country, he had met senior executives at state-owned mining company Yacimientos de Litio Bolivianos (YLB). 

He had even brought a delegation of Bolivian officials to India—to get them to meet the state government, research bodies like state-owned ARCI (International Advanced Research Centre for Powder Metallurgy and New Materials) and EV industry executives. “That was in 2019,” Sunkavalli told CarbonCopy. “And then, there was the coup in Bolivia.” 

Evo Morales was overthrown. In the weeks that followed, the former president would call the coup an American attempt to stop Bolivia’s lithium extraction partnerships with China and Russia. In the meantime, as collateral damage, Sunkavalli’s plans seemed imperilled. 

In response, not only did the company turn to other Latin American sources, including Brazil, it also approached the Telangana government. “We met KT Rama Rao, Telangana’s industries minister, and told him about our plans to source lithium from Bolivia.” After that, Telangana State Mining and Development Corporation (TSMDC) got involved in the company’s talks with Bolivia.

Land-locked Telangana, with little mineral resources of its own, is trying to groom itself into a manufacturing cluster for emerging sectors like data centres, medical devices, aerospace and life sciences. EVs and EV components are in that list as well—in 2019, it announced plans to set up a multi-gigawatt lithium battery manufacturing cluster. To differentiate itself from other states wooing the EV supply chain, said Sunkavalli, the state also told TSMDC in 2020 to acquire mines and minerals needed for cell manufacturing. Its rationale? Securing critical mineral supplies would give it a competitive advantage over other geographies vying to attract the EV value chain. 

KABIL (Khanij Bidesh India Ltd) has similar compulsions. As the first part of this series said, India might need as much as 600 GWH of battery storage by 2030. To make all of these locally, the country will need 600,000 tonnes of lithium. “One GWh of Cathode Active Material (CAM) will need about 1,000 MT of Lithium,” Sunkavalli told CarbonCopy.

To procure such volumes, not only is KABIL trying to pick up minority stakes in critical mineral mines, it is also extending governmental support to private companies forging deals. “(KABIL) says companies should go, identify potential mines, and then it will support and secure (supplies) via a G2G deal,” said Kiriti Varma, a co-founder of Altmin.

In May, when CarbonCopy spoke to Sunkavalli, he said discussions with YLB were back on track after the coup failed—and a democratic government returned to power. The company is now readying its 3 GWh CAM (Cathode Active Material) manufacturing plant in Telangana.

Hardwired into Altmin’s experience is a larger story. As countries vie to secure their critical mineral supplies, how is India, as a relatively industrialised developing country, navigating this competition?​

​The question about geopolitics

Ours is a time when global critical mineral supply chains are in turmoil. 

On one hand, like India, nations without critical mineral deposits are trying to secure independent supplies of these minerals.

The EU’s Critical Minerals Act seeks to secure its supplies of critical minerals. Canada, Australia and the UK have similar legislations. Wanting to phase China out of its battery supply chain by the beginning of 2025, the USA has launched the Minerals Security Partnership (MSP) with the European Union and nine other partner countries. It’s this coalition that India has newly entered. (Companies are getting into this race as well. GM and Mercedes Benz have invested in lithium producers. Tesla, too, is backwards integrating into lithium refining and processing.)

This trend of friend-shoring—where countries are vying to secure critical mineral supplies for them and their allies—is counterbalanced by a parallel trend of resource nationalism. One set of countries—like Peru, Argentina, Mexico, Congo and Kazakhstan—are nationalising their critical mineral reserves to have greater say on realisations from ore exports. Another set no longer wants to export raw ore. In 2020, Indonesia, home to the world’s biggest nickel reserves, banned exports of unprocessed nickel to get miners to process the ore locally—albeit at high environmental costs. It’s now getting companies to build production capacities along the EV supply chain—from plants that make EV battery materials; to battery cell plants; and EVs themselves.

It’s not the only one. Australia, which used to export lithium to China for processing wants to process ore locally. So do countries like Zimbabwe, Mexico, Chile, Namibia, Brazil, and others.

The outcome? To lock mineral-rich countries into long-term supply contracts, buyers will have to locate a part of their value chains in these countries—which, however, creates a precondition for expertise in refining and technological/manufacturing competitiveness—areas where India is weak, while others like China are strong.

Competition is similarly underway to lure green manufacturing chains. The USA has launched legislation like the Inflation Reduction Act (IRA) which, among other things, wants to boost clean energy manufacturing in the country. As the Financial Times wrote: “The US Inflation Reduction Act offers billions of dollars in tax credits to battery companies only if a certain percentage of the value of critical minerals contained in their products is processed or extracted in the US or by partners with free trade agreements.”

The outcome is heightened competition for not just mineral reserves, but also manufacturing units. The IRA is showing results. Even Indian companies—like Vikram Solar and Epsilon—are setting up manufacturing units in the USA. 

In all this, China is not sitting idle either. Not only is it setting up processing and battery plants in countries that have nationalised their deposits, it continues to lead in R&D. At a time when most batteries have an energy density below 300 watt hours/kilogram, CATL has just unveiled a battery capable of storing 500 wh/kg. It’s expected to find use in aviation as well as boost EVs’ range to 1,000 km per charge.

One response to this, countries and companies are trying to pare their critical mineral requirements.

The ongoing centrality of lithium

Even at the most superficial level, battery technology is fascinating. 

Cells have a cathode, an anode, a separator and an electrolyte. Anode, usually made of graphite, is weak at retaining electrons. Cathode (or CAM, Cathode Active Material comprising a mix of minerals including lithium) exerts a stronger pull on electrons. 

When a battery is charging, lithium ions move through the separator/electrolyte to the anode. When discharging, they move back to the cathode. As the cathode becomes more positively charged than the anode, negatively-charged electrons follow them. The separator, however, blocks their flow through the battery—making them flow through the device being powered to the cathode. 

Both anode and cathode come in diverse configurations—each with its own characteristics. Lithium Titanate (LTO) can be used as anode instead of graphite. Those cells charge faster, but have lower energy density, said Uttam Sen, co-founder of e-TRNL Energy, a Bangalore-based cell-manufacturing startup in India.

CAMs, too, come in diverse forms. NMC (Nickel Manganese Cobalt, all of which are combined with lithium) and LFP (Lithium Iron Phosphate) dominate the world right now. CAMs are also made from LTO (Lithium Titanium Oxide), LMO (Lithium Ion Manganese Oxide), NCA (Lithium Nickel Cobalt and Aluminum Oxide), and LMNO (Lithium Manganese Nickel Oxide). While each comes with different qualities—nickel adds capacity, manganese and cobalt lend stability, aluminium increases power, says this page on a Samsung website—lithium is a common element in all of these.

One morning in April, trying to understand why, CarbonCopy met Sagar Mitra. A professor at IIT Bombay’s Department of Energy Science and Engineering; he has been working on lithium from the days of his PhD.

An EV makes three demands on its batteries, Mitra said that day. “It needs batteries that can produce the high output needed to get a stationary vehicle moving without discharging completely.” At the same time, it should recharge quickly and not be too heavy. Given the relative ease with which it sheds electrons, lithium-based batteries have the highest energy density of any battery technology today. In addition, lithium-based cells can deliver up to 3.6 volts, three times higher than other chemistries like nickel-cadmium or nickel metal hydride. This means these can deliver large amounts of current for high-power applications.

With alternatives like solid state and sodium ion batteries are yet to catch up, lithium dominates the market.

Within lithium ion, even though NMC holds more energy than LFP, it’s easier for India to make the latter. Two of its inputs (iron and phosphate) are available in the country. Only lithium has to be imported. “The cost of an LFP battery for a bike will be between ₹18,000-20,000,” said Arvind Bhardwaj, the founder and CTO of Mini Mines Cleantech Solutions, a Bangalore-based startup working on lithium recycling. “If you take NMC, that price doubles.”

This is a global trend. Countries are working their way around mineral shortages. “While we are talking about lithium, cobalt is the major problem,” said Sen. Unlike lithium, which is found in 5 or 6 countries, cobalt is mostly available in the Congo where its supplies are controlled by either China or Belgium (which had colonised Congo).

The fallout? A falling share of cobalt in rechargeable batteries. “Lithium cobalt oxide batteries have lithium, cobalt, nickel, and manganese,” said Sen. “At one time, these had nickel, cobalt and manganese in equal quantities. A couple of years ago, that 33:33:33 ratio changed to 20:20:60. It is now becoming 80:10:10. In some years, we might just need lithium nickel oxide.”

Some minerals, however, will remain indispensable. Lithium is one. While India is finding deposits within the country, it will still take years to verify and extract the mineral. In the meantime, the country has ambitious targets. 

Lithium is available in two forms—as mineralised ore and as brine deposits. Australia has the first, known as spodumene. ABC (Argentina-Bolivia-Chile) have brine. Today, as India tries to secure lithium supplies, not only is it getting state agencies like KABIL and NMDC to scout globally for reserves, it is also extending diplomatic support to companies like Altmin firming up their own supply arrangements.

This, however, is where messy domestic nuance enters the picture.

Will Indian battery makers source components locally – or import?

In 2019, India set up KABIL (Khanij Bidesh India Ltd).

A critical mineral equivalent of ONGC Videsh, it has to trawl the world for mines––and grab as many assets as it can. 

Media reports and government press releases tell us the agency has signed MoUs to explore critical mineral reserves in Australia—and that it has signed similar MoUs with state companies in Argentina and is exploring projects in Chile. From the instance of Altmin, we also know Kabil wants to support companies firming up their own critical mineral supplies.

One afternoon in May, CarbonCopy asked Randheer Singh about Altmin and Bolivia. Till June this year, Singh worked as director (e-mobility) and senior team member (advanced chemistry cells program) at Niti Aayog. He left NITI to start his own outfit. “Countries like Australia, Argentina, Bolivia and Chile are taking control over their mineral resources,” he said. “And so, apart from KABIL making its own investments, we are encouraging companies to follow leads on their own. We have told them: we have connections with these countries. We can do the facilitation you need. The companies too said they want support.”

And yet, it’s too early to say how successful this tack will be. As the next part of this report will show, while Indian investment in rechargeable battery manufacturing is rising, most firms have not backwards integrated to a stage where they need critical minerals. For instance, Tata wants to build a 20 GWh lithium ion cell plant. Reliance’s gigafactory for batteries will be even bigger— — 50 GWh. Amara Raja batteries is building its 16 GWh plant for lithium ion cells. Exide is planning a 12 GWh capacity. 

At this time, it’s unclear if these units will source batteries’ components (CAM, electrolyte, anode, separator) locally—even making them on their own—or if they will buy those from global manufacturers. Both models exist. “China’s CATL spans the whole value chain,” said Sen. “Other companies, like Belgium’s Umicore, only straddle a particular rung in the value chain.” 

The concluding part of this series will get into more detail on this question. 

For now, though, this make or import decision will sizably determine the quantum of critical minerals India will need. Only firms making cell components––like Altmin, which is eyeing an eventual capacity of 10 GWh of CAM––will need access to critical minerals.

There is a question there as well. Will these firms want to source critical minerals directly from mines? Most of these reserves are in volatile countries—the Congo is wartorn; countries in Latin America are seeing lively contestations on mineral policies. It’s easy to see why engineering firms will not want to get into messy critical mineral mining.

For this reason, several startups want KABIL to source critical minerals on its own—as opposed to expecting them to generate leads.

KABIL, searching on its own

KABIL has to scout for mines. Next, it has to bring processed minerals to India and, perhaps like coal auctions, sell them to bidders.

One question here, in this time of resource nationalism, is about its attractiveness as an investment partner. India lags other countries when it comes to knowhow on processing and refining spodumene and its ilk.

For this reason, KABIL has not been very successful in markets like Bolivia. In 2021, YLB (again) began inviting international bids to develop direct lithium extraction technologies and extract lithium from its brine resources. None of the 20 companies on the long list were Indian. For this reason, it might have to take minority stakes—like ONGC Videsh—in producing mines.

The agency, however, is likely to be more successful in Australia. The country is estimated to have 5.7 million tonnes of lithium reserves, second only to Chile. Not only is India a large market, Australia is also trying to reduce its dependence on China—at this time, its lithium ore is shipped to China for purification. Also, the two countries enjoy good diplomatic relations.

And then, there is the US-led Mineral Security Partnership (MSP). Not only does it aim to secure critical mineral supplies for its member countries, it also wants to distribute RE manufacturing chains amongst them to reduce exposure to China. At this time, a lot remains unclear about MSP—how will critical minerals sourced by the partnership be shared between members? Which parts of the manufacturing chain will come to India? A lot of ore processing is very polluting. And so, might India end up making a tradeoff between mineral security and environmental pollution? 

And then, there is domestic sourcing of critical minerals. This takes two forms. The first is domestic exploration. “Despite having the world’s fifth-largest reserves of rare earth minerals in the world, India lags behind other countries due to lack of private participation, stringent laws and absence of technology,” India’s mines secretary Vivek Bhardwaj said at a press conference in May. 

The lithium found in Reasi fits in here. At 5.9 million tonnes, it is putatively bigger than Australia’s reserves. It’s yet unclear, however, how much ore can be extracted from here. Also unclear, given the mountainous terrain, is its cost of extraction. 

The latter point, however, draws US shale to mind. Even if lithium from Reasi is expensive, it will become viable whenever global lithium prices spike, providing India with a cushion.

That said, domestic sourcing extends well beyond mining. There is also the prospect of recycling.

Can India crack the recycling opportunity? 

While working on this report, CarbonCopy met Arvind Bhardwaj, the founder of Bangalore-based Mini Mines Cleantech.

His startup is one amongst a handful trying to extract lithium from discarded batteries. As batteries age, their efficiency falls. The reasons vary—cells might leak; the battery management system might malfunction; lithium ions might adhere poorly to ageing electrodes; one could go on. At this stage, batteries sent for recycling are shredded, their constituent cells crushed. After removing the more easily isolated components, “The plastic and Iron covering is removed first. And then, the aluminium and then copper,” said Bhardwaj. What is left is a black powder called Black Mass. “This is the chemistry of the battery—graphite, lithium, iron, phosphate; or lithium, cobalt, Nickel, and manganese; or lithium and titanium, depending on the type of cell,” he said.

This is where things get interesting. If lithium refining is about breaking spodumene, an undifferentiated clump of minerals, into its constituent elements, recycling has a similar task on its hand. Till recently, firms recycling rechargeable batteries stripped what they could extract and exported the black mass to companies like Umicore.

That is changing now. Startups like Mini Mines and Meta Stable are trying to extract critical minerals themselves. One tonne of crushed battery will yield, he told CarbonCopy, 30-40 kilos of lithium carbonate. “We will be able to extract about 96% of lithium from the battery,” he said. That is just the start. Ore and brine contain no more than 0.6% lithium, at best. In contrast, as Bhardwaj said, the concentration of lithium (or any other critical mineral) in a battery runs higher.

For this reason, he added, recycled lithium will be cheaper. This claim was reiterated by Larry Reaugh, the president of American Manganese, a Vancouver-based company working on rechargeable battery recycling. His firm can extract metals at 30 cents a pound, he told an industry website. To put that in context, the price of cobalt stood at $41 by 2022.

For this reason, if the recycling ecosystem takes off, India might need to import lithium only for new demand—not replacement demand.

The catch here: the world is seeing a race in recycling technology as well. And, as CarbonCopy had found while reporting on PLI, India is doling out manufacturing subsidies but not investing in fundamental R&D.

The supply side story

Put it all together and it becomes clear that India has multiple pathways for securing critical minerals.

Not only is the country paring its requirements of hard-to-find minerals, it is extending diplomatic support to companies while getting KABIL and NMDC to scout for mineral reserves globally. It has also entered the Mineral Security Partnership and is prospecting domestically. Apart from these, there is the prospect of recycling.

And yet, these measures aren’t enough to insulate the country from geopolitical risk. 

At this time, Chinese firms dominate the lower reaches of India’s two-wheeler and three-wheeler EV markets. Firms like BYD and MG have entered the four-wheeler market as well. If these firms reprise China’s success in solar panels in the EV market – or if Indian firms continue sourcing components from China – the country’s dependence on Chinese supply chains will continue.

Similarly, if other countries make rapid inroads into India’s energy storage market, India’s dependence on them will rise. 

In other words, India’s vulnerability runs deeper than just critical mineral supplies. To meaningfully insulate itself – and to capitalise on the China + 1 opportunity — the country has to develop its own value chains. 

In the EV sector, between the FAME subsidies and the PLI programme for advanced chemical cell batteries, India is trying to create such an ecosystem. 

How is that going?

Read the first and third part here.

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M Rajshekhar

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