Mining for critical minerals: what is the auction process, and why is it important?

Context- Twenty blocks of critical minerals are currently on auction for commercial mining by the private sector. The mineral blocks contain lithium ore, which has use in batteries and electric vehicles, and another 10 of the 30 minerals that the government declared as “critical” in July.

The bidding process began on November 29, and bids can be submitted until January 22 next year. The total value of these blocks is estimated at Rs 45,000 crore, subject to further discoveries or revisions in inferred reserves.

(Credits- Indian Express)

This is the first time that rights related to the mining of lithium ore are being auctioned to private parties. Other minerals in the blocks include nickel, copper, molybdenum, and rare earth elements (REEs). All these minerals are utilised in key supply chains for vehicle batteries, energy storage devices, consumer electronics, and vital industrial processes.

Where are these critical mineral blocks, and what rights are being auctioned?

  • The Notice Inviting Tender (NIT) floated by the Ministry of Mines says the 20 blocks are spread over eight states. There are seven blocks in Tamil Nadu, four in Odisha, three in Bihar, two in Uttar Pradesh, and one each in Gujarat, Jharkhand, Chhattisgarh, and Jammu & Kashmir.
  • Only four of these 20 blocks are being auctioned for a Mining Licence (ML), which means that once the licence is granted, the licensee can begin mining operations after obtaining the requisite clearances.
  • Three of these four blocks are in Odisha, and contain deposits of nickel, copper, graphite, and manganese. The fourth block is in Tamil Nadu, and contains deposits of molybdenum.

And what sort of rights are being auctioned for the other 16 blocks?

  • The remaining 16 blocks are being auctioned for a Composite Licence (CL), which allows the licensee to conduct further geological exploration of the area to ascertain evidence of mineral contents.
  • Once the licensee collects sufficient information on mineral deposits, they can make an application to the relevant state government to convert their CL to an ML to begin mining operations pending requisite clearances.
  • The licensee has three to five years to complete the prescribed level of exploration, failing which the licence will be withdrawn.

What are the other clearances that will be required before operations begin?

  • The NIT notes that out of the total concession area of 7,197 hectares (for all 20 blocks), 17 per cent or 1,234 hectares is forest land with status as per the PM Gatishakti portal, the digital platform to facilitate integrated planning and monitoring of infrastructure projects around the country.
  • Once granted a licence, the licensee will have to obtain 15 approvals and clearances before beginning operations. These include forest clearance, environmental clearance, Gram Sabha consent, etc.

What are the estimated reserves of key critical minerals in these blocks?

  • The two blocks of lithium reserves, one each in J&K and Chhattisgarh, are up for auction for a CL
  • According to the NIT, the J&K block has an inferred reserve of a 5.9 million tonne (mt) of bauxite column, which contains more than 3,400 tonnes of lithium metal content. This block also contains more than 70,000 tonnes of titanium metal content.
  • The block in Chhattisgarh contains lithium and REEs, but no drilling has been conducted yet to estimate total reserves.
  • Nickel ore reserves have been found in three blocks, one each in Bihar, Gujarat, and Odisha. While no drilling has been conducted for the blocks in Bihar and Gujarat, in the Odisha block, the NIT states an inferred value of 2.05 mt of nickel ore, which amounts to 3,908 tonnes of nickel metal content.
  • This Odisha block is being auctioned for an ML. It is also the only block among the 20 that contains deposits of copper — amounting to 6.09 mt of copper ore and 28,884 tonnes of copper metal content.

How does India currently get its supplies of these minerals?

  • Minister Joshi told Lok Sabha in August that in FY23, India imported 2,145 tonnes of lithium carbonate and lithium oxide at a total cost of Rs 732 crore. Lithium carbonate contains up to 19 per cent lithium. Lithium oxide, which is usually converted to lithium hydroxide, contains 29 per cent lithium.
  • India also imported 32,000 tonnes of unwrought nickel at a cost of Rs 6,549 crore, and 1.2 million tonnes of copper ore at a cost of Rs 27,374 crore, in 2022-23.
  • India is 100 per cent reliant on imports for its lithium and nickel demand. For copper, this figure is 93 per cent.

What will happen after the ongoing round of auctions is over?

  • The bidding process began after the government declared 30 minerals as “critical”, and amended a key law to allow for the mining of three critical minerals, lithium, niobium, and REEs, earlier this year. To attract bidders, the government also specified new royalty rates for critical minerals, matching global benchmarks.
  • The bid for each block will be awarded on the highest percentage of mineral dispatch value quoted by the bidder. After the ongoing auction is over, the process to auction a second tranche of critical mineral blocks is expected to begin.

Way Forward- The Ministry has told Parliament that the Geological Survey of India has taken up 125 projects in the current fiscal to explore critical mineral reserves in the country. In the preceding eight fiscal years, a total of 625 mineral exploration projects were undertaken. The Ministry’s Report  released in June this year recommended that a Centre of Excellence for Critical Minerals should be established to frame policies and incentives for creating a complete value chain of critical minerals in the country.

Syllabus- GS-1; Minerals

Source- Indian Express


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