How Indian can avoid China’s lithium trap?

China has a huge head start on India in terms of securing lithium deposits, which are a critical component of electric vehicle batteries. This could slowdown India’s efforts to become self-sufficient in the EV era, but Attero Recycling, the country’s largest electronic asset management company, has a solution. It claims that India can become a recycling center, capable of supplying 100% of its battery material requirements, including lithium-ion, in just ten years. But the question is how India can avoid China’s lithium trap?

There is expected to be a wild hunt for lithium-ion reserves as electric vehicles demand will grow exponentially in the coming years. Lithium-ion is the backbone of all EV batteries today. With China having a clear head start in this area, India is in a tough position, since its current reliance on Gulf countries for imported oil might be replaced by lithium controlled by China.

It is estimated that within ten years, recycling will be able to provide India’s whole battery material need, including precious metals such as cobalt, nickel, graphite, manganese as well as lithium.

“Within the next 10 years, we should be able to meet 100% of India’s demand for battery materials, which include cobalt, lithium, nickel, graphite, and manganese,” says Nitin Gupta, CEO, and co-founder, Attero Recycling.

To accomplish this, the capacity or infrastructure for recycling lithium-ion batteries must expand. To supply that demand in the meanwhile, we’ll have to import end-of-life lithium-ion batteries from elsewhere. However, after only four years, there will be no need to import because local production of end-of-life batteries would be sufficient to meet fresh battery demand.”

Lithium-ion batteries have become the de facto standard for a wide range of electronic devices, including smartphones, laptops, tablets, and fixed storage devices such as solar panels and telecom towers. Electric vehicles will increase demand for lithium-ion batteries by a factor of ten, but it will also open up a market for end-of-life recycling, which companies like Attero are attempting to exploit. It also serves as a source of raw materials.

“Then almost 40 to 50% of the cost of a vehicle today is the cost of the battery, out of which almost 30% is the cost of metals, which includes cobalt, nickel, lithium, and graphite. Each of these metals has significant ESG issues (environmental social issues), as well as supply security issues.”

According to the company’s estimates, India’s cumulative lithium-ion battery demand would be around 970 GWh in 2021-25, and will more than quadruple to 2410 GWh in the next five years (see table). Domestic recycling output is expected to increase from 125 GWh to 1670 GWh, while recycling capacity will increase from 1.25 million tonnes per annum to 9 MTPA, according to estimates.

We are simply substituting China for Saudi Arabia since we do not produce our cells. Even if we produce our battery cells, thanks to the government’s 50 Gwh PLI scheme for advanced cell chemistries, we’ll still need to figure out where to get lithium and cobalt. China controls 97 percent of the world’s lithium supply at the moment. They don’t have the resources, but they can refine enough lithium to meet the demand. As a result, a country like India needs to figure out all data sources related to battery materials from a geopolitical aspect.

It’s a legitimate fear that’s being voiced by a growing number of people. Andy Palmer, vice chairman and CEO of Switch Mobility, said at the recently ended ETAuto EV Conclave 2022 that India needs to forge its path and be aware of geopolitical ramifications.

“It is the location of the battery Giga factories that will determine the location of the future car industry. If you’re going to invest, and India must invest, then invest in technology that drives you forward and not one that ties you geopolitically to China,” Palmer said.

According to Attero, the sector might be valued at more than $50 billion by 2030. By then, India’s EV market is expected to be worth $ 206 billion, with EV batteries accounting for 80 percent of the lithium-ion battery market, up from roughly 35 percent currently. Attero is investing Rs 300 crore to increase its lithium-ion recycling capacity by 11 times, from 1000 to 11,000 tonnes per year, to grab 22% of the market by October. By the end of this year, it will have more than doubled its overall e-waste management capacity to 300,000 tonnes per year, with another 156,000 tonnes on the way. The firm has set a goal of producing 200 GWh of Lithium equivalent through urban mining by 2030.

Recycling is especially significant because of the environmental and human rights concerns surrounding the mining of these precious metals. Today, about 70% of the world’s cobalt is mined in the DRC, a country in central Africa where child labor and other forms of exploitation are common. Furthermore, given the rising demand for cobalt and known reserves, the metal may face a severe scarcity by the end of this decade. Similarly, half of the world’s lithium is currently mined in a triangular region in South America that includes Argentina, Bolivia, and Chile, and is also one of the planet’s driest locations. One tonne of lithium requires 500,000 gallons of water to extract, resulting in numerous social and environmental challenges.

Lithium-ion battery recycling, cobalt extraction, and reintegration into the circular economy are not only excellent for the environment but it is also motivated by supply security at this time. So whether you’re talking about lithium, cobalt, or any other battery element, there are substantial environmental, social, and supply security concerns.