India Targets SQM's Australian Lithium To Diversify Its Imports

India wants to secure a stake in Chilean mining leader SQM's (NYSE:SQM) projects in Australia. This deal would give India, a lithium importer, access to critical battery minerals to cater to its growing market.

According to anonymous sources cited by Reuters exclusive report, the Indian consortium, led by Khanij Bidesh India Ltd (KABIL), is pursuing stakes in SQM's Mount Holland and Andover lithium projects in Western Australia. Per initial estimates, a 20% stake in these projects would be worth around $600 million.

"This is so far India's biggest attempt to secure lithium supplies overseas. The due diligence is on, and the companies have expressed their interest with an initial offer," a source told Reuters.

India's EV sales made up just 2.5% of the over 4 million cars sold in 2024. However, the growth velocity of 20% in the year far outpaced most other markets, prompting the stakeholders to secure a supply of this critical metal from SQM, the world's second-largest producer.

Sourcing Australian lithium would help the fastest-growing major economy move from its close dependence on imports from China and Hong Kong.

While India announced a 5.9-million-tonne lithium discovery in Jammu and Kashmir in 2023, those projects have stalled so far, as two failed auction attempts revealed weak investor interest.

Initially hailed as a breakthrough, these projects faced geological and technical challenges. Furthermore, industry experts argue that the reported lithium content is much lower than the Geological Survey of India (GSI) initially claimed, and the deposit's clay-based composition makes extraction difficult owing to the presence of potassium, aluminum, silicon, and fluorine.

Moreover, as a source of conflict between India and Pakistan, the region's political instability has deterred potential investors. Tensions remain high since India revoked Jammu and Kashmir's semi-autonomous status in 2019.

Although GSI pursued exploration in Odisha, Karnataka, and Rajasthan, the details of those efforts remain unknown. Additionally, last year, KABIL signed an agreement with the Argentinian state-owned CAMYEN, securing exploration and exploitation rights for 15,700 hectares in the province of Catamarca.

Still, mine development is a slow and complex process, often taking over a decade to reach full-scale production. Thus, India's latest move signals that the government has recognized that waiting to develop a domestic supply is not a viable short-term solution.

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