#auction setbacks

India’s pursuit of lithium, a crucial mineral for electric vehicles and energy storage, has encountered another hurdle. The Ministry of Mines recently annulled the auction for the lithium block in Jammu and Kashmir’s (J&K) Reasi district for the second time. This decision on July 25 has led officials to consider further exploration before attempting another auction.

The J&K lithium block, containing an estimated 5.9 million tonnes of lithium ore, has struggled to attract sufficient investor interest. The initial auction on March 13 failed to meet the minimum requirement of three bidders, leading to its annulment. A second attempt was made the following day but also fell short of success, with no qualified bidders advancing past the first round.

According to auction rules, a block with fewer than three bidders can proceed to the second round if it fails to meet the initial criteria. However, the J&K lithium block did not have any qualified bidders in the first round, preventing the auction from moving forward. The Ministry of Mines has acknowledged this issue, stating that further exploration might be necessary before the block can be auctioned again.

Union Minister of Coal and Mines, G Kishan Reddy, indicated that exploration work is underway with the Geological Survey of India (GSI) collaborating with the J&K government. The aim is to complete this exploration promptly and prepare the block for a future auction.

The lithium block’s first auction, part of India’s initial tranche of critical mineral auctions, aimed to award a composite license (CL) for prospecting and mining operations. This attempt was annulled due to insufficient bidder participation. A second auction was held without altering the bid documents, but it similarly failed to secure the required number of bidders.

The Mineral (Auction) Rules, 2015, stipulate that if a block doesn’t attract at least three technically qualified bidders, it can be re-auctioned. For the re-auction, the reserve price must be set at the highest initial price offered by technically qualified bidders from the previous attempt, which in this case was 11.25 percent.

Bidder feedback from the first auction revealed concerns about the bid document’s limited information and the block’s size. Questions also arose about the feasibility of extracting and processing lithium from the J&K deposits. The Ministry of Mines has acknowledged these issues, which may have contributed to the lack of interest.

Despite these setbacks, India has made progress in its lithium mining ambitions. A successful auction was held for a lithium block in Korba, Chhattisgarh, with Maiki South Mining Pvt Ltd winning the bid on June 24. This success and promising results from other exploration efforts in the region offer hope for future developments in domestic lithium mining.