India is subsidizing battery storage and lithium and nickel processing to build a domestic supply chain, but securing raw materials and competing with established overseas processors remain obstacles.
The cabinet approved 145 billion rupees (US$1.5 billion) for grid-scale storage Wednesday, alongside 28.14 billion rupees for lithium and nickel processing. The measures support both demand for battery materials and the plants that would supply them.
“Midstream bottlenecks like feedstock uncertainty, price volatility, and global overcapacity are discouraging investment in refining and processing,” Kaira Rakheja, an energy analyst at the Institute for Energy Economics and Financial Analysis, said in a May assessment of India’s minerals strategy.
While the new support addresses a financing gap identified by researchers, building processing capacity doesn’t secure the minerals to feed it. For mining companies, India could become another customer outside China; turning that opportunity into investment will require supply agreements that work for both Indian processors and overseas producers.
Storage program
The storage program targets 92 gigawatt-hours of capacity through fiscal 2030–31, including 30 GWh of batteries with a minimum 40% domestic-content requirement. It also supports 60 GWh of pumped hydro and 2 GWh of alternative storage technologies, the government said.
The benefits for miners will depend on the technology deployed. Pumped hydro accounts for most of the supported capacity, while lithium iron phosphate batteries dominate battery storage without requiring nickel or cobalt in their cathodes. The International Energy Agency puts their share of battery energy storage systems above 90%.
Public and private electricity distributors will be eligible for support for battery and pumped-hydro projects, with capacity awarded through competitive tariff bidding. Storage would help shift surplus renewable electricity into periods of higher demand.
Under the separate processing program, subsidies will cover 30% of eligible investment in four plants over five years. Two lithium plants must each have capacity of at least 30,000 tonnes, while two nickel plants must each have at least 50,000 tonnes.
The announcement did not specify whether those tonnages refer to feedstock, finished compounds or contained metal, or the period over which capacity is measured.
The program targets the conversion of ores and intermediate products into high-purity compounds, with cobalt potentially recovered as a nickel by-product. Applicants must first meet technical requirements, after which the government will select bidders seeking the least capital support, it said.
The cabinet announcement didn’t name beneficiaries or identify their feedstock suppliers.
Foreign input
India’s processing ambitions depend on securing foreign minerals, technology and financing, limiting what domestic subsidies alone can achieve, Zainab Usman and Vivek Shastry argued in an Oct. 28 analysis published by Columbia University’s Center on Global Energy Policy.
But that strategy faces competing industrial ambitions. Resource-rich countries increasingly want to process their own minerals, while wealthier partners seeking diversified supplies also want to retain manufacturing, the researchers said.
India’s measures follow its critical minerals agreement with the United States in May, which established a framework for cooperation on mining, processing and supply security.
The financing problem extends beyond construction costs. In their May assessment, researchers at the Institute for Energy Economics and Financial Analysis and Climate and Sustainability Initiative identified volatile prices, long project timelines and uncertain returns as obstacles to private investment. They also called for closer links between mineral processing and manufacturing incentives.
Usman and Shastry identified joint ventures, long-term offtake agreements, technology partnerships and selective co-investment as ways for India to build relationships that benefit both suppliers and customers.
Source: www.northernminer.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
