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Why 29 November 2023 is Crucial for India's Best Lithium Stocks

Nov 29, 2023

Editor's note: It's so simple. You spend less than you earn.

Invest shrewdly, avoid toxic people and toxic activities, and try and keep learning all your life.

And do a lot of deferred gratification because you prefer life that way.

And if you do all those things you are almost certain to succeed. If you don't, you're gonna need a lot of luck.

This was Charlie Munger's formula for success in life. Warren Buffett's long-time partner at Berkshire Hathaway and the man who introduced investors to the Latticework of Mental Models is no more.

Munger's eternally insightful quotes and teachings will always stay with us.

Why 29 November 2023 is Crucial for India's Best Lithium Stocks

Are you ready for India's lithium stocks gold rush?

I asked this to you, dear reader, in March 2023. This is because I could sense the beginning of a mining megatrend in India, like the one China had.

China has had its own lithium gold rush over the past few years.

Miners in China raced to feed rampant demand for the EV battery fuel. Especially, to benefit from record global prices of lithium.

Now, the miners are grappling with a close-up inspection by environment officials sent from Beijing. And if found at fault, they even risk closures.

Meanwhile, in India, the lithium frenzy is yet to begin.

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Today at 5pm - India's Best Lithium Stocks
Lithium is the new oil.

That's the reason why India is focusing heavily on expanding its lithium reserves.

If you can tap into this opportunity with India's best lithium stocks, then there is a potential to make huge gains over the long term.

At our special event this evening at 5pm, we're going to reveal everything about this big opportunity.

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July 2023 saw the first major announcement.

The Indian government approved amendments to the Mines and Minerals (Development and Regulation) Act, 1957, allowing for the mining of lithium and five other minerals.

This allowed private mining companies to mine the six critical minerals - lithium, beryllium, titanium, niobium, tantalum, and zirconium.

Earlier this year, the Ministry of Mines had declared 30 minerals as 'critical' for the country, including these six minerals.

These minerals are required for manufacturing in several sectors, including electric vehicles (EV), EV batteries, glassware, automotive components, defence machinery, telecommunication equipment, capacitors, superalloys, carbides and medical technology.

The amendment also paved the way for granting mineral concessions for undertaking the full range of exploration starting from reconnaissance to prospecting operations.

The companies are also allowed to transfer the mineral concession in full or part during the exploration period or after exploration, which makes the mining bids attractive.

This was as a big boost to the potential lithium gold rush in India.

Especially, since India aims to reach a milestone of 50% cumulative electric power installed capacity from non-fossil sources by 2030. This ambitious energy transition plan is poised to stimulate demand for lithium to unprecedented levels.

But today is a significantly more crucial day in India's lithium gold rush history.

India will, for the first time on 29 November 2023, invite bids for 20 critical mineral blocks, including lithium and graphite.

Why is this auction so critical?

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India has been exploring ways to secure supplies of lithium, a critical raw material used to make electric vehicle batteries. In February 2023, India found its first lithium deposits in Jammu and Kashmir with estimated reserves of 5.9 million tonnes.

So, the recent amendments to the Mines and Minerals Act are critical for auctioning the lithium blocks identified in Jammu and Kashmir apart from few in Karnataka.

Lithium-ion battery costs rose exponentially in 2022 for the first time in the EV era.

India has set an EV sales penetration target of 30% for private cars, 70% for commercial cars, 40% for buses, and 80% for two and three-wheelers by 2030. That makes lithium discovery critical to India's targets of meeting its climate-related commitments.

Understandably, the share of lithium in EV batteries has increased by more than 200% in the last few years. In the last financial year, batteries comprised 74% of lithium consumption all across the world.

The production of lithium was cornered by Australia, Chile, and China since decades. Through mergers, acquisitions and mining rights, Chinese state backed companies now control 60% of the world's capacity for processing raw lithium.

In fact, not just lithium, China has cornered production of other rare minerals too, which may be necessary for electronics manufacturing.

A report by the International Energy Agency says more than half of lithium, cobalt and graphite processing and refining capacity is located in China.

Being dependant on Chinese exports is not a long-term solution for India. Hence, India has been looking for lithium reserves in countries all across the world.

The government is worried that the scarcity of these minerals in India could create vulnerabilities within the EV battery supply chain. Hence the need to invite private sector entities.

The entry of private sector mining players is seen as a landmark event that could change the course of India's energy transition and electric mobility.

But do not assume that the public sector entities have no role to play.

Rather state-run enterprises have been actively scouting the globe in search of these valuable mineral resources. Prominent energy giants like Coal India and NTPC have been meticulously strategizing their foray into the mining sector to tap into these essential materials.Additionally, the establishment of Khanij Bidesh India, a joint venture involving three government-owned companies, further underscores India's commitment to securing critical mineral assets not just domestically but on an international scale.

I strongly believe that like in China, lithium mining in India will have it its own gold rush.

The lithium gold rush will have its own sets of miscreants who will find loopholes in environmental regulations.

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And like in China, few Indian miners too may face backlash due to indiscriminate lithium mining to cash in on the steep prices. This could cause environmental hazards and put parts of India's electric vehicle ecosystem at risk.

But the trend of indigenous lithium mining in India is here to stay. Some niche players in the EV ecosystem are best poised to capitalise on the opportunity.

My colleague Richa Agarwal and I have selected two stocks that could be the key beneficiaries of the mining auction on EV battery making.

Today possibly marks the beginning of India's lithium gold rush. And investors who get on to the EV lithium battery megatrend early could reap the richest dividends.

Warm regards,

Tanushree Banerjee
Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)

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1 Responses to "Why 29 November 2023 is Crucial for India's Best Lithium Stocks"

Gunesh Apte

Nov 29, 2023

As pointed out in this article, Lithium market across the world has been captured by China.
It is essential for Rest of the World to put their act together to ensure that, China should not take advantage of this situation by controlling the pricing. Maintaining harmony with nature while allowing mining across the world would be the key element to watch, else all the advantages of having EV vehicles would be lost.
Hope that, the world balances this and ensures that, EV would not only reduce CO2 but also the nature is preserved while mining the precious Lithium and associated minerals going forward.
I believe that, there is lot of efforts required for EV to become successful, as Hydrogen based vehicles and lot of other alternative may emerge in near future.

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