Why China's lithium find should ring alarm bells in India

China is now the world’s second-largest holder of lithium reserves.

The development comes after Beijing found a massive reserve of lithium in the country’s west.

China remains behind Chile but has jumped ahead of Australia, Argentina and Bolivia.

Lithium is a crucial element in today’s world.

It is used in a number of industries ranging from electric vehicles to cellphone communications and nuclear fuel.

But what happened? And should alarm bells be ringing in India?

Let’s take a closer look:

What happened?

As per Xinhua, China found a world-class spodumene-type lithium belt spanning 2,800 kilometres.

Spodumene is a hard rock ore from which lithium is extracted, according to Science and Technology Daily.

The belt spans West Kunlun-Songpan-Ganzi, as per Global Times.

The discovery includes a mine in the Xikunsong-Pan-Ganzi region in Tibet, and some lithium salt lakes in the Qinghai-Tibet Plateau.

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The find has led to a massive jump in the country’s lithium resources – from six per cent of all global reserves to 16.5 per cent.

As per Global Times, the lithium belt alone has reserves of over 6.5 million tons.

The potential reserves could be as large as 30 million tonnes.

The China Geological Survey under the Ministry of Natural Resources said that the find has moved it up from sixth place to second place when it comes to lithium reserves.

The discovery of the lithium salt lakes also means China is now home to the world’s third-largest salt lake resources – after the lithium triangle in South America of Argentia, Bolivia and Chile and western America.

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The newly-discovered salt lake lithium resources could be over 14 million tonnes.

Salt lake is a low-cost lithium source.

As per SCMP, the find suggests reserves may be discovered in Qinghai, Sichuan and Xinjiang – all neighbouring areas which have similar geological characteristics.

China Daily quoted Wang Denghong, a senior scientist at the China Geological Survey, as saying this exploration began in 2021.

The China Geological Survey has found 10 million tonnes of lepidolite lithium ore in Hunan province, Jiangxi and Inner Mongolia, around 10 million tons of brine lithium ore in Qinghai and and 10 million tons of spodumene lithium ore in Xinjiang.

The scientist added that the 10 million tonnes of newly discovered lithium resources can be extracted at a lower cost and higher efficiency thanks to a technological breakthrough in extracting lithium from lepidolite.

Industry insiders told China Daily that the expansion of the EV market and the global demand for lithium have played a huge role in limiting China’s industrial development.

This breakthrough will greatly increase the supply of lithium in China, bring down its reliance on imports, improve the security of the industrial chain and remake the global lithium resource landscape, they added.

Global Times quoted Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, as saying that Beijing achieved this via breakthroughs and advancements in salt lake and mica lithium extraction technologies.

“China’s competitiveness in the lithium battery industry is bolstered by its complete industrial chains, which allow the production of high-quality batteries at lower costs, ensuring greater competitiveness in the global market,” Lin said.

“A significant portion of global battery production and capacity is concentrated in China, which accelerates the iteration and advancement of related technologies,” Lin added.

“For a long time, the country has had a high dependence on foreign lithium resources, with high volumes of imports. This has driven up production costs and limited the development of related industries,” Xinhua reported.

It added that the new discoveries “are expected to alleviate the tight supply of lithium resources and promote healthier development of the global lithium market”.

Should India be worried?

Some say India should be worried.

India in 2023 had for the first time discovered lithium reserves.

Around 5.9 million tonnes of lithium reserves were found in Jammu and Kashmir’s Reasi district.

However, New Delhi’s attempts to capitalise on the reserves have not yielded any fruit.

In November 2023, India failed to get a required minimum of three bids in its first auctions,

Then, a second attempt to sell of the rights with a May 14 deadline also did not receive any bids, according to a source with direct knowledge of the matter.

The source, who declined to be identified as they were not authorised to talk to the media, said the block was likely to be given to a government agency for further exploration after no bids were made.

As electric vehicles have focused on the need for lithium, used in making batteries, India has sought to secure assets overseas as well as domestically.

The discovery of the lithium reserves in China may have even further strengthened its hand.

This is because China already has an outsized influence on Chile.

As per The Diplomat, China has already made massive investments in Chile particularly in the energy sector.

Chinese state firms have spent the past decade buying up several Chile energy firms under Beijing’s Belt and Road Initiative.

Chinese firms now control around two-thirds of the entire sector.

The diplomat piece also noted that China imports 74.1 per cent of all Chilean copper exports and 72 per cent of its lithium exports.

“Coupled with investments in key mining and infrastructure projects, all of this increases China’s economic leverage over Chile,” the piece stated.

Some worry this latest discovery, combined with China’s influence in Chile, could allow Beijing to dictate terms to the rest of the world.

With inputs from agencies