As the global race for Cobalt and Lithium intensifies, India is actively trying to acquire their mines abroad to ensure that it has access to such strategic minerals. China has already taken a substantial lead in the race.
Why is this important
- Lithium and cobalt are critical elements in batteries that power mobile phones, laptops and electric vehicles. The global race for these minerals is intensifying in the wake of the growing use of such vehicles.
- A joint venture(JV) will be formed between National Aluminium Company (Nalco), Hindustan Copper (HCL) and Mineral Exploration Corp. Ltd (MECL). Private sector companies who are interested are also allowed to participate in it. Nalco is the lead partner in this JV.
- After Niti Aayog formalises the proposal, India will be able to access these raw materials abroad. The JV’s main mandate will be to look for and acquire strategic mineral assets abroad, particularly those in which India is deficient.
- India has no known sources of lithium and cobalt. The main sources of lithium include Congo in Africa and the lithium triangle (Argentina, Bolivia(25% of the World’s reserve) and Chile). Congo is the leading producer of cobalt (54% of world’s supply).
- According to the automobile industry, India’s requirement of lithium is expected to be 3,50,000 tonnes per year.
- US Geological Survey claims that global cobalt production has quadrupled since 2000 to about 123,000 metric tons a year.
Stocks to be impacted
India’s large population and the big stage of economic development will demand renewable energy and efficient automotive transportation. It is imperative that India acquires these key minerals and stay ahead of the curve.
Hindustan Copper (CMP: Rs.60, Mkt Cap: Rs. 5,565 Crores, FY2019 EV/EBITDA: 16.53)
National Aluminium Company (CMP: Rs. 60, Mkt Cap: Rs. 11,636 Crores, FY2019 EV/EBITDA: 4.07)