Kashmir: Lithium mining plans put off indefinitely with no bidders, expert criticism

This article was originally published in Rest of World, which covers technology’s impact outside the West.

Sunil Thakur, a 24-year-old engineering graduate, once planned to build a career as a civil engineer. But jobs were scarce, and so Thakur spent his days frying samosas for his family’s snack shop in Salal – a picturesque mountain village of about 10,000 people in India’s northern state of Jammu and Kashmir.

Then, in February 2023, Thakur’s dreams of prosperity were suddenly revived.

India’s mining ministry informed the villagers that they were sitting on a fortune: 5.9 million metric tons of lithium, a silver-white metal that is a core component of the batteries necessary for India’s transition to clean energy.

The discovery – a first in India – would make the country the holder of the fifth-largest lithium reserve in the world, mining officials announced. Indian media outlets jubilantly reported that companies including Mitsubishi, Tesla and Ola Electric were eyeing the reserve.

Thakur and his family started daydreaming about selling their land in exchange for “a duplex home in a big Indian city, and loads of cash”, he said. He imagined investing in the family business, first established by his grandfather nearly four decades ago.

Two years later, nothing has happened. The government tried to auction the lithium block twice in March, and failed both times, due to a lack of bidders. The extraction plans have been halted indefinitely.

There were several red flags surrounding the auction, according to PV Rao, a senior geologist in the mineral industry who represents India at the Committee for Mineral Reserves International Reporting Standards, a forum that sets standards for exploration results.

For one, the amount of lithium in the Salal reserve is much less significant than initially reported, Rao and other industry experts told Rest of World. They said that only about 0.02 million tonnes of lithium carbonate is present in the ore body, a small fraction of the levels seen in other major reserves. Secondly, the reserve holds minerals in clay-deposit form, which is difficult to mine commercially.

According to Rao, the geological report commissioned by the government didn’t contain enough information about the reserve to meet international standards. “That report is [a] very, very skeleton type of report with limited information, based on which the bids are being made,” he said, adding that genealogical reports produced by the Indian government often contain “misleading and quite inadequate” information.

“It was irresponsible of the government to act that way. It is nothing but actually hiding the facts,” Rao said. “Are you trying to sell it and put the investors into doom?”

According to Saurabh Priyadarshi, a former chief geologist at Geoxplorers Consulting Services with 30 years of experience advising conglomerates in the mining and metal business, “the auctions will fail every time if offered in its unexplored form” due to “inadequate information.”

Shafiq Ahmed, who was a district mineral officer at Reasi in Jammu when the Ministry of Mines announced the reserve, told Rest of World that a handful of private companies tested the samples independently and “were not satisfied” with the quantity and quality of the lithium. “That’s why the companies are walking back on it,” he said.

“It is neither feasible nor financially viable,” Ahmed said. “The government announced it in haste.”

Lithium was first discovered in Salal by accident when a team of geologists visited the region in the 1990s looking for bauxite, a source of aluminum. Decades later, in 2018, as lithium became important in the global transition to clean energy, Indian mining officials returned to the area for exploration.

Even if the reserve were truly stocked with “white gold,” as lithium is now sometimes called, mining in Salal village is fraught with challenges. For companies looking to invest in minerals, Jammu and Kashmir is a region full of uncertainties, Puneet Gupta, an electric mobility expert and director at rating agency S&P, told Rest of World. “The state suffers from political instability, violence, and lack of peace – any company coming in will see all those things in the picture,” he said.

Salal is located in the disputed and conflict-hit Kashmir region, near India’s border with Pakistan. In the past two years, militant attacks have intensified in the areas surrounding Salal. A local militant group announced it would attack any company that mined the lithium reserve, calling mining “the colonial exploitation and theft of resources of Jammu and Kashmir”.

The village is situated on the Chenab River, part of a water-sharing treaty between India and Pakistan. Lithium mining is a resource-intensive process that heavily pollutes water and soil, affecting local residents, agriculture, and biodiversity. The region is also highly seismically active. “These factors make any industrial intervention in the area a complex and delicate undertaking,” Priyadarshi said.

Before putting the reserve up for auction again, the government will consider further exploration. Mining officials say that may take months or years. Thakur, the snack shop worker in Salal, is furious about the delay. He said he feels like his future is caught up in the uncertainty. He was planning to renovate the shop, but is now hesitant to invest in infrastructure that might be “bulldozed the next day,” he said. “We have been standing on the gallows – I feel like the lever can be pulled any day.”

Karan Singh, Thakur’s 65-year-old uncle, lives with his mother in a well-furnished three-room house that sits over the mineral deposits. Before the discovery was announced, Singh had never heard of lithium. He said he spent many nights afterward dreaming of the family’s reversed fortunes.

Now, however, he welcomes the delay. He remembers growing up with clean air and water, amid “the natural beauty of my village”, he told Rest of World. Moving home at his age would be a difficult task, Singh said, and he is content for the lithium to remain in the ground so that he can stay.

Yashraj Sharma is a reporter based in India.

This article was originally published in Rest of World, which covers technology’s impact outside the West.