New Delhi: With India and Argentina signing an agreement for lithium exploration in the South American nation by an Indian company, New Delhi’s reliance on China for this critical clean energy source will be reduced significantly. As the world pivots towards cleaner energy solutions, India’s strategic move into the heart of Argentina's lithium deposits signals a transformative shift in the narrative of global supply chains.
Till now, almost nearly 54 percent of India’s lithium purchases came from China. Australia and Chile currently dominate raw materials output, while China is the world’s largest refiner of this mineral. But, with the signing of the agreement between India’s state-owned Khanij Bidesh India Ltd (KABIL) and Argentina’s Catamarca Minera y Energética Sociedad del Estado at Catamarca, Argentina, earlier this week will lead to a significant diversion of New Delhi’s lithium global import sources.
This is the first ever lithium exploration and mining project by a state-owned Indian company. According to the agreement, KABIL will start exploration and development of five lithium brine blocks – Cortadera-I, Cortadera-VII, Cortadera-VIII, Cateo-2022-01810132, and Cortadera-VI covering an area of about 15,703 hectares - located in the Catamarca province of Argentina. KABIL is also preparing to set up a branch office at Catamarca, Argentina. The project’s cost is about Rs 200 crore.
So, why is lithium important as a clean energy source?
Lithium, also referred to as “white gold”, plays a crucial role in clean energy technologies, particularly in the development of rechargeable batteries. Lithium-ion batteries are widely used for energy storage in renewable energy systems, such as solar and wind power. These batteries can store excess energy generated during periods of high renewable energy production and release it when demand is high or during periods of low renewable energy generation.
This helps in balancing the intermittent nature of renewable energy sources and ensures a more reliable and stable power supply. Lithium-ion batteries are the dominant technology in electric vehicles. As the world transitions towards electric transportation to reduce dependence on fossil fuels and mitigate climate change, lithium becomes a critical component for the production of lightweight, high-capacity batteries that power electric cars and buses.
Lithium-ion batteries are widely used in portable electronic devices such as smartphones, laptops, tablets, and wearable devices. The popularity of these devices contributes to the demand for lithium, and advancements in battery technology have led to increased energy density and longer-lasting batteries. Lithium-ion batteries are increasingly being used for grid-scale energy storage projects.
These projects involve large-scale battery installations that can store and release electricity to help balance the grid, manage peak demand, and enhance grid reliability.
Why is India looking for increased use of lithium?
According to Goal 7 of the UN’s Sustainable Development Goals (SDGs), the world must get access to clean and affordable energy by 2030, which is key to the development of agriculture, business, communications, education, healthcare and transportation. The world continues to advance towards sustainable energy targets – but not fast enough.
At the current pace, about 660 million people will still lack access to electricity and close to 2 billion people will still rely on polluting fuels and technologies for cooking by 2030. India is actively pursuing the establishment of domestic manufacturing capabilities for a wide range of zero-emissions technologies. This ambitious initiative aligns with New Delhi’s commitment to achieving carbon neutrality by 2070 and seizing opportunities arising from the worldwide shift towards cleaner energy.
With a target of generating 500 GW of clean power capacity by 2030, the focus on substantial battery storage deployment becomes paramount, essential for ensuring the continuous utilisation of renewable energy sources around the clock.
So, what is the geostrategic advantage that India will pull off through this agreement?
Argentina is the part of “Lithium Triangle” along with Chile and Bolivia with more than half of the world’s total lithium resources and having the distinction of having the second largest lithium resources, the third largest lithium reserves and the fourth largest production in the world. “This strategic move not only strengthens the bilateral ties between India and Argentina but also contributes to the sustainable development of the mining sector, ensuring a resilient and diversified supply chain for critical and strategic minerals essential for various industries,” the Ministry of Mines said in a statement.
Argentina giving India access to the lithium reserves signals Buenos Aires’ tilting towards New Delhi against Beijing. Argentina had last year withdrawn from the BRICS (Brazil, Russia, India, China, South Africa) economic bloc for which it was granted membership. Newly elected Argentine President Javier Milei has consistently emphasised his three-pronged approach to trade and foreign policy. He categorises himself primarily as “an ally of the United States, Israel, and the West”.
Throughout his presidential campaign, Milei also disparaged countries ruled “by Communism” and said that he would not maintain diplomatic relations with them despite growing Chinese investment in South America. Milei assumed office at a time when his country’s economy has been hit by three-digit inflation and increase in poverty levels and is faced with a recession.
By giving access to its lithium reserves, Argentina has signaled that it endorses India as the Voice of the Global South which New Delhi has been projecting itself as during its G20 presidency last year and which China has been contesting. The new India-Argentina lithium deal now gives India the opportunity to reduce its dependence on China for this critical mineral amid strained ties between New Delhi and Beijing over border disputes.
