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Australia looks to India for wide market for lithium export

The Hindu | 31 March 2023

Australia looks to India for wide market for lithium export


Australia would rather have a diversified market for its lithium exports –and this includes India –than they all be cornered by the United States, Don Farrell, Australia’s Minister for Trade and Tourism said in a media interaction. Lithium is a critical metal necessary to make batteries for electric vehicles.

Mr. Farrell was speaking in the context of the U.S.’ Inflation Reduction Act (IRA), passed in August 2022, that grants major subsidies to electric vehicles produced in the United States. The European Union and South Korea have vehemently criticised the IRA on the grounds that it made electric vehicles imported into the U.S. from their regions uncompetitive. Amitabh Kant, India’s G20 Sherpa has also labelled the Act “as the most protectionist in the world.”

Australia, Mr Farrell said, “hadn’t been critical of the IRA” because it stood to gain from it. One of the clauses of the Act required that at least 40% of all the ‘critical minerals’ (which includes lithium) that go into making electric batteries must come from countries with a Free Trade Agreement with the United States. “There are very few countries with both an FTA and the largest reserves and we are one of them. So we see great opportunity for Australia. What we don’t want to see is all of those critical minerals gathered up and headed to the United States,” said Mr. Farrell.

Australia is the world’s biggest exporter of lithium with most of it going to China, which dominates the lithium-ion battery production market. Just as the United States and Europe, Mr. Farrell said, were looking to Australia (for minerals) because the only other source was China, Australia was looking to diversify away from a single market and this opened opportunities for India. “We give you the opportunity of investing in our country. India is building an electric vehicles industry and Australia would like to be part of it,” he reckoned.

Access to critical minerals is increasingly an area of cooperation between the two countries. Australia’s Minister for Resources, Madeleine King, and India’s Minister for Mines, Pralhad Joshi signed an agreement earlier this month to invest $3 million each to investigate the prospects of Indian investments into two lithium- and three cobalt- prospecting projects in Australia. Both King and Farrell were part of an Australian delegation to India led by Prime Minister Anthony Albanese early March -the first in six years –and on the heels of the Economic Cooperation and Trade Agreement (ECTA), which entered into force in December, 2022.

“We want to have a diversity of investments in our critical minerals productions and to ensure we build secure chains for our friends and partners, like-minded democracies around the world and even better when it involves a close neighbour like India,” said Mr. King in an interaction. This agreement, is under an existing ‘Critical Minerals Investment Partnership’ between the two countries.

While exports of coal to India and iron ore to China continue to be major planks of Australia’s trade relationships, its commitments to be net zero (zero net carbon emissions) by 2050 and cut the share of coal in electricity generation from the existing 70% to 18% by 2030, means that coal mines are increasingly falling out favour and greater priority being accorded towards mines that yield minerals useful in making batteries. Australia based Sicona, that works in battery technologies, is setting up a plant in Chennai along with an as-yet-unnamed Indian company to make improved lithium-ion batteries, the company’s Chief Executive Officer, Christian Jordaan, disclosed in an interaction.

(The writer is in Australia courtesy the country’s Department of Foreign Affairs and Trade)

 source: The Hindu