Explained | Who should own the world’s lithium?

What has the Supreme Court said on the ownership of land? How big is India’s electric vehicle market? How are the South American countries of Chile and Bolivia managing their lithium reserves? What lies in India’s future with respect to the lithium industry?

June 01, 2023 10:40 pm | Updated June 02, 2023 10:55 am IST

Lithium stones in the Reasi district of Jammu & Kashmir.

Lithium stones in the Reasi district of Jammu & Kashmir. | Photo Credit: PTI

The story so far: The news of potentially significant reserves of lithium, an element needed to manufacture batteries used in electric cars and other renewable energy infrastructure, in Jammu and Kashmir has been welcomed universally. Commentators have called this a boost for national prosperity and security without dismissing concerns about the potential social and environmental impacts.

What is the status of India’s lithium industry?

India’s electric-vehicle (EV) market was valued at $383.5 million in 2021, and is expected to expand to $152.21 billion in 2030. India imported 450 million units of lithium batteries valued at $929.26 million (₹6,600 crore) in 2019-2020, which makes the development of the country’s domestic lithium reserves a matter of high stakes. Scholars have argued that the ongoing global transition to low-carbon economies, the rapid expansion of artificial intelligence (AI), and 5G networks will greatly reshape global and regional geopolitics. The access to and control over rare minerals, such as lithium and cobalt, will play a crucial role in these epochal changes.

Who should own these minerals?

In July 2013, a three-judge bench of the Supreme Court of India ruled that the owner of the land has rights to everything beneath, “down to the centre of the earth”. Yet, large areas of land, including forests — which make up more than 22% of India’s landmass — hills, mountains, and revenue wasteland are publicly owned.

The Supreme Court also recalled that the Union government could always ban private actors from mining sensitive minerals, as is already the case with uranium under the Atomic Energy Act 1962. In today’s context, lithium is as important as, if not more than, uranium.

How do other countries manage lithium reserves?

The stories of two South American countries, Chile and Bolivia — which have the largest known reserves of lithium — are particularly instructive.

In Chile, the government has designated lithium as a strategic resource and its development has been made the exclusive prerogative of the state. The state has licensed only two companies — SQM and Albemarle — to produce lithium in the country. In April 2023, Chile’s president Gabriel Boric announced a new “National Lithium Strategy”, which many in the corporate sector took to be a declaration of his intention to nationalise the industry. On the contrary, Mr. Boric has clarified that his government would honour existing contracts. As a supplement, the new strategy calls for public-private partnerships for future lithium projects, which will allow the state to regulate the environmental impact of lithium-mining, distribute the revenue from lithium production more fairly among local communities, and promote domestic research into lithium-based green technologies.

Bolivia’s new constitution, developed under the leadership of former president Evo Morales and approved by a popular vote in February 2009, gave the state “the control and direction over the exploration, exploitation, industrialisation, transport, and commercialisation of natural resources.” The Morales administration nationalised lithium and adopted a hard line against private and foreign participation. This is believed to be one of the factors for the country’s failure to produce any lithium at a commercial scale nearly 20 years after the industry was nationalised. Bolivia’s current president, Luis Arce, seeks to change that. However, instead of handing over lithium resources to the private sector, Mr. Arce wants to join hands with other Latin American countries to design a ‘lithium policy’ that would benefit all their economies.

Mexico’s president Andrés Manuel López Obrador also nationalised lithium in February this year, declaring, “Oil and lithium belong to the nation, they belong to the people of Mexico.”

In general, the countries in Latin and South America are thinking through ways and means to pursue a multi-pronged strategy. While the national governments of these countries exercise a significant degree of control, the nature of private sector participation varies between these countries. The actions of these governments are also a response to the mobilisation of Indigenous Peoples in the region who want to hold corporations as well as governments to account.

What next?

As India explores and develops its own lithium reserves, it is notable that the appropriate development of this sector will require a very high level of effectiveness on the part of the Indian state. Much of India’s mineral wealth is mined from regions with very high levels of poverty, environmental degradation, and lax regulation. Effective and careful management of the sector should be paramount if India’s rare minerals development is to meet its multiple goals — social wellbeing, environmental safety, and national energy security.

The writer is an associate professor of Environmental Studies and affiliated faculty at the Heller School for Social Policy and Management at Brandeis University, Waltham, USA

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