Are You Ready for India’s Lithium Stock Gold Rush?

Its top production hub, which accounts for about a tenth of the world’s supply, is facing widespread shutdowns. The government is investigating the facility for environmental violations.

The crackdown in Yichun, Jiangxi province, follows a local lithium frenzy over the past year. Miners in China rushed to meet the huge demand for EV battery fuel. Specifically, to benefit from record global prices of lithium.

Now, miners are battling closer oversight from environmental officials dispatched from Beijing. And they also run the risk of being shut down if a fault is found.

Meanwhile, the lithium craze in India has only just begun.

In 2010, only 23% of available lithium was being used by industries for lithium-ion batteries. The ceramic and glass sector dominated the demand for lithium with 31% of the total share. But the demand for lithium has grown massively over the past decade.

Electric mobility has become central to India’s drive towards carbon neutrality. Auto makers and ancillary companies are demanding every piece of the e-mobility pie.

There are battery cores for EVs. The demand for lithium-ion batteries has increased.

India has set an EV sales penetration target of 30% for private cars, 70% for commercial cars, 40% for buses and 80% for two-wheelers and three-wheelers by 2030. This makes lithium exploration critical to India’s climate mitigation goals. Related commitments.

Obviously, part of the lithium EV battery There has been an increase of over 200%.

Last fiscal year, batteries accounted for 74% of worldwide lithium consumption.

Now Australia, Chile and China have taken over the production of lithium in the last few years. Through mergers, acquisitions and mining rights, Chinese state-backed companies control 60% of the world’s capacity to process crude lithium.

In fact, not only lithium, China has also captured the production of other rare minerals that may be essential for electronics manufacturing.

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

Relying on Chinese exports is not a long term solution for India. Therefore, India is looking for lithium reserves in countries across the world.

Recently, the Geological Survey of India (GSI) found 51 lithium and gold deposits in the state of Jammu and Kashmir. The potential tonnage, 5.9 million, has catapulted India from zero to the world’s top 10 in lithium sourcing overnight.

However, both the nature and the actual tonnage need to be verified.

Also, like China, lithium mining in India will have its own gold rush.

The lithium gold rush will have its own troublemakers who will find loopholes in environmental regulations.

And like China, some Indian miners may also face backlash for indiscriminately mining lithium to cash in on the high prices. This can cause environmental hazards and put India’s electric vehicle ecosystem at risk.

So, by all means, keep an eye on lithium mining trends in India. But be careful before you decide to dive into the gold rush.

Rather hedge yourself by venturing to the upside for other viable EV industry fuels such as green hydrogen,

At the latest Equitymaster conference, I spoke at length on the importance of green hydrogen in India’s EV ecosystem.

Here’s My Video on the Checklist for Green Hydrogen Stocks,

Disclaimer: This article is for information purposes only. This is not a stock recommendation and should not be treated as such.

This article is syndicated equitymaster.com