The mining of these critical minerals are deemed essential in the country for developing its own lithium ion battery value chain and reaching its ambitious clean energy goals.
In particular, lithium is a key raw material in electric vehicle (EV) batteries and energy storage applications.
The royalty rates for lithium extraction by mining companies will be fixed at 3% of the lithium prices published by the London Metal Exchange, the government said. The announcement paves the way for the auctioning of the lithium reserves recently discovered in the country.
Earlier this year, India announced the discovery of two lithium deposits in the country.
In February, it announced the discovery of a deposit containing 5.9 million tonnes of inferred lithium resources in the Salal-Haimana area of the Reasi District in the northwestern region of Jammu and Kashmir.
In May, the discovery of a second deposit in the country’s western state of Rajasthan was announced, but the size of the new discovery has not yet been disclosed.
The Indian government previously announced that it aimed to reach net zero emissions by 2070 and to meet fifty percent of its electricity requirements from renewable energy sources by 2030.
India’s EV market is forecast to reach annual sales of 10 million by 2030, growing at a compound annual growth rate (CAGR) of 49% between 2022 and 2030, according to the government-run Strategic Investment Research Unit (SIRU).
The royalty announcement followed a recent government announcement that the process for the auctioning of critical minerals discovered in the country, such as lithium, could start by the end of this year.
“The establishment of a fixed 3% royalty is attractive when compared to established producers such as Chile. This paves way for the auction of lithium mining blocks, details of which were released earlier this year,” Jordan Roberts, Fastmarkets battery raw materials analyst, said.
“It should be noted that this is the first step of many, and it will likely be a considerable period of time before these deposits begin producing based on project development timelines. In the meantime, India will still rely on imports to support its developing battery industry,” Roberts added.
The Indian government also set the royalty for niobium mining at 3% of the average sale price, and the royalty for rare earth elements at 1% of the average sale price of rare earth oxide.
Fastmarkets research forecasts a 72,400 tonne market deficit of lithium carbonate equivalent (LCE) this year, with carbonate prices in China, Japan and Korea expected to average $42.18 per kg for 2023, compared with $71.24 per kg in 2022.
Lithium spot prices have showed signs of weakness in recent months due to subdued demand, but a number of market participants expect spot demand to recover during the last quarter of this year due to traditional restocking activities.
Fastmarkets’ assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea was most recently at $23.00-24.50 per kg on October 13. This compared with $34-42 per kg on June 2, when the market experienced a seasonal market lull over the summer period with ongoing weak demand, sources said.
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