Due to weak investor response, the Ministry of Mines was forced to scrap the auction for the lithium block in Jammu and Kashmir’s Reasi district for the second time.
Nearly 18 months then Mines Secretary Vivek Bharadwaj had announced the discovery of an inferred deposit of 5.9 million tonnes of lithium ore, pitched as among the largest deposits in the world, in Reasi last February.
As officials feel there is need for further exploration before attempting another auction, last year’s optimism has given way to a harsh reality.
The first auction was annulled on March 13 after less than the required minimum of three bidders cleared the first round. The very next day, the ministry put the block for auction again.
This too was annulled last week, after failing to clear the first round despite the minimum bidder requirement being waved off this time around, as per auction rules. The second attempt saw no qualified bidders at all.
“Critical Minerals are [being] auctioned in the country for the first time. Like any other auction… the required number of responses may or may not be received,” the ministry said. With respect to the J&K lithium block, the “ministry is examining whether further exploration is required,” it said.
Mining industry experts feel difficulties around extracting and processing lithium from hard rock pegmatite deposits — like the ones found in Reasi — combined with underdeveloped mineral reporting standards used in tender documents played a significant role in deterring investors.
According to a document with the ministry, during the first auction attempt, prospective bidders had a number of complaints — from the bid document having limited information of the block to the block being too small “to apply modern mineral systems-based tools”. Another query asked if any beneficiation study had been conducted to assess the feasibility of extracting and processing lithium from the resources identified in J&K, to which the ministry replied in the negative.
In March earlier this year, representatives of Vedanta Group had asked the Mines Ministry to shift to an investor-friendly resource classification code during a stakeholder meeting.
According to experts, India’s current resource classification rules largely based on the United Nations Framework Classification for Resources (UNFC) do not provide sufficient information to determine the economic viability of mining a mineral block.
Clarity on the economic viability of mining lithium is especially important as the extraction process is expensive, and with global lithium prices falling significantly over the past few months, miners are increasingly eager to maintain their margins.
Most mining companies, stock exchanges, and regulatory bodies across the world adhere to the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) template, instead of the UNFC one, which requires the reporting of economically viable reserves with high geological confidence confirmed through studies to at least a pre-feasibility level.
In the absence of resources/reserves reports compliant to internationally recognised reporting standards, the auctioning system is not going to yield the desired results. Many allottees of critical mineral blocks may not even start the work despite being successful in the auction.
NACRI has developed and maintained the Indian Mineral Industry Code (IMIC) since 2019, which is recognised by CRIRSCO as a compliant code.
In case the government decides to move ahead with further exploration of the Reasi block, before another auction attempt, new findings may provide more clarity to potential investors on the nature of resource present, which at present is only “inferred”.
Alternatively, the government can choose to skip the auction process and reserve the area for the undertaking of prospecting or mining operations through a government-owned company, as allowed under the Mines and Minerals (Development and Regulation) (MMDR) Act.
As per the critical mineral blocks are concerned… 14 blocks out of the 38 blocks have been successfully auctioned and preferred bidders have been declared, the Mines Ministry said in its response. In other words, 24 of the 38 blocks could not be auctioned off in the first attempt. The ministry has re-offered some blocks in a second attempt, like the Reasi lithium block, and intends to re-offer many more.
Last month, the ministry successfully auctioned off India’s first lithium block in Chhattisgarh’s Korba district. The bid was won by Kolkata-based Maiki South Mining Pvt Ltd on June 24 for an auction premium (a percentage additional charge on the hammer price) of 76.05%.
Also in Korba, just south of this auctioned off lithium block, a private exploration company funded by the National Mineral Exploration Trust (NMET) has found hard rock lithium deposits ranging from 168 to 295 parts per million (ppm). Further exploration could yield an even larger reserve estimate.
Lithium exploration in other states, however, has not been as fruitful, meeting minutes of a top NMET committee revealed.
In Manipur, efforts to explore lithium in Kamjong district were stalled due to resistance from locals in the area. “The committee decided to drop the item for the time being due to local issues,” the minutes of an NMET meeting on the matter said.
In Ladakh’s Merak block, very close to the border between India and China, a lithium exploration funded by NMET yielded “results (that) are not encouraging”. The NMET committee also recommended to “drop” an item dealing with the upgradation of a lithium exploration in Assam’s Dhubri and Kokrajhar districts.
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