Why India is finding it difficult to buy critical mineral assets abroad, expand footprint, Pg13

Key Highlights:

• Khanij Bidesh India Ltd (KABIL), India's overseas acquisition vehicle, faces significant hurdles in securing critical mineral assets abroad.
• Challenges include high asset valuations, volatile mineral prices, financial constraints, and socio-political risks in resource-rich nations.
• KABIL has successfully acquired five lithium brine blocks in Argentina but has struggled to expand its footprint in other countries like Australia and Chile.
• An Indian consortium's bid for Australian lithium mines was outbid by South Korean steel and chemical major POSCO.
• A parliamentary panel has recommended strengthening KABIL's financial capacity, manpower, and promoting private sector participation to enhance India's critical mineral acquisition strategy.

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Detailed Insights:

• KABIL, a joint venture of National Aluminium Company Ltd (NALCO), Hindustan Copper Ltd (HCL), and Mineral Exploration & Consultancy Ltd (MECL), was incorporated in 2019 under the Ministry of Mines.
• The consortium, including KABIL, Coal India Ltd (CIL), Oil India Ltd (OIL), and ONGC Videsh Ltd (OVL), submitted a non-binding offer for a stake in the Mt Marion and Wodgina lithium mines in Australia.
• The Australian lithium assets were eventually acquired by POSCO for $765 million, significantly higher than India's revised offer of $233 million.
• Reasons for the unsuccessful Australian bid included the absence of a domestic value chain for spodumene concentrate, high volatility in lithium prices, and intense competition.
• KABIL also failed to submit a bid for a high-value lithium brine project in Chile due to limited time for due diligence by partnering companies.
• India has identified 30 critical minerals, including lithium, cobalt, and nickel, which are crucial for its clean energy transition, digital technologies, and defense.
• The country is highly import-dependent for many of these critical minerals, making secure overseas acquisition vital for economic development and national security.
• The parliamentary panel's report, tabled on August 12, recommended measures to strengthen KABIL's capital base and human resources, and institutionalize faster decision-making.

Key Concepts Involved:

• Critical Minerals: Minerals vital for economic development and national security, characterized by high supply risk and importance in advanced technologies.
• Khanij Bidesh India Ltd (KABIL): A joint venture company formed by Indian Public Sector Undertakings to identify and acquire critical and strategic mineral assets abroad.
• Spodumene Concentrate: A lithium-bearing mineral found in hard rock formations, processed to produce battery-grade lithium compounds.
• Lithium Brine Blocks: Naturally occurring saline water reservoirs containing dissolved lithium, primarily found in arid regions like Argentina and Chile.
• Non-Binding Offer (NBO): A preliminary proposal in a business transaction that does not create a legal obligation for the parties involved.