In first critical mineral auction, no bidder for J&K lithium block

The maiden auction of critical minerals by the Centre has faced a setback with close to seven blocks, including the lithium block in Jammu & Kashmir (J&K), finding almost no takers.

These seven blocks pertain to critical minerals, such as Glauconite, Graphite, Nickel, Platinum Group Elements (PGE), Potash, Lithium, and Titanium. They are spread across Bihar, Jharkhand, Tamil Nadu, Uttar Pradesh, and Jammu and Kashmir (J&K).

According to sources, the government did not receive a single bid for the lithium block in J&K in the first round.

“There is a lack of interest from potential buyers in the lithium block due to its perceived unviability. The uncertainty stems from the fact that only G3 level exploration was conducted, leaving ambiguity about the true value of the reserves. Investors are hesitant to commit funds without a thorough assessment of the resource’s worth,” a source aware of the development said.
 

Since the ministry failed to secure a minimum three bids for these blocks, it announced a second auction round on March 14. (The proceedings and results will be on hold due to the model code of conduct).
 

Queries sent to the Ministry of Mines seeking details about bidders remained unanswered at the time of publication.

During the launch of the auction process on November 29, Union Mines Minister Pralhad Joshi expressed confidence that India would achieve self sufficiency in critical minerals. He estimated the value of these blocks at Rs 45,000 crore.
 

However, experts expressed scepticism regarding India's ability to achieve its ambitious target for self-sufficiency in critical minerals. This is due to lack of clarity on the potential data of the reserves.
 

According to the United Nations Framework for Classification of Resources, the exploration of minerals is divided into four stages — G4 (reconnaissance), G3 (prospecting), G2 (general exploration), and G1 (detailed exploration).
 

The G4 stage entails estimating quantity with grade through regional assessments and limited subsurface sampling, resulting in low-confidence estimates.
 

Progressing beyond reconnaissance, the G3 stage maintains low-confidence estimates.
 

The G2 stage indicates a more comprehensive assessment with a moderate level of confidence in estimating quantity with grade.
 

At the G1 level, the most advanced stage, high-confidence estimates are derived from in-depth investigations, extensive sampling and direct analysis.

In addition to the lack of clarity on reserves, the high cost of investment in exploration has deterred potential investors from participating in the bidding process.
 

“No domestic players possess expertise in critical mineral mining, and foreign investors are hesitant to make significant investments in India due to lack of policy clarity.
 

It is highly probable that the second round of auctions will also witness no participation,” an industry expert requesting anonymity said.
 

This setback raises concerns about India's ability to reduce its reliance on critical mineral imports.
 

The government aims to position itself as a manufacturing leader, but without access to domestic critical minerals like lithium, achieving this goal may prove to be challenging.
 

Between financial year 2021-22 (FY22) and FY23, there has been a jump of 34 per cent in import of critical minerals.

These include Glauconite, Nickel, PGE, Potash, Graphite, Molybdenum (ore), Phosphorite (Phosphate), Lithium, Titanium, and Rare Earth Elements (REE).
 

An analysis of the Ministry of Commerce and Industry data reveals that the import value of all these 10 minerals rose 34 per cent to $11 billion (Rs 91,000 crore) in FY23 from $8.3 billion (Rs 68,000 crore) in FY22.
 

Most of these minerals are imported from China, which is the leader in global production and supply of these resources.

With investors failing to bid, experts suggest that India will continue to rely on China for securing its raw materials.
 

The Centre has initiated the auction of 38 critical & strategic minerals to date. The initial tranche included 20 blocks, while the subsequent tranche consisted of 18 blocks.