Why in News?

• Critical minerals such as lithium, cobalt, nickel, rare earth elements and graphite are indispensable for electric vehicles (EVs), batteries, renewable energy, electronics, defence and advanced manufacturing.
• With domestic reserves and production insufficient to meet future demand, India is seeking overseas mineral assets through Khanij Bidesh India Ltd. (KABIL).
• India’s critical-mineral strategy combines domestic exploration, overseas asset acquisition, recycling, substitution and processing capacity to reduce vulnerability to concentrated global supply chains.

What’s in Today’s Article?

• KABIL and India’s Overseas Strategy
• Relative Success and Opportunity Lost
• Chile - Financial Constraints and Institutional Delays
• Structural Challenges Experienced by KABIL
• Way Forward

KABIL and India’s Overseas Strategy:

• Established in 2019, KABIL is a joint venture of National Aluminium Company Ltd. (NALCO), Hindustan Copper Ltd. (HCL) and Mineral Exploration & Consultancy Ltd. (MECL).
• Its mandate is to identify, explore, acquire and develop overseas critical-mineral assets.
• However, KABIL’s expansion has faced difficulties in Australia, Vietnam, Mali and Chile, with several proposed investments being delayed or abandoned. Argentina remains the principal area of tangible progress.

Relative Success and Opportunity Lost:

• Argentina:
  • KABIL has acquired five lithium brine blocks in Catamarca province. It is also evaluating seven additional greenfield lithium blocks in Catamarca and negotiating two more lithium projects in Jujuy.
  • The progress in Argentina reflects India’s attempt to secure lithium resources at source and develop a more resilient supply chain for the emerging battery economy.
• Australia:
  • In December 2024, a consortium of KABIL, Coal India Ltd. (CIL), Oil India Ltd. (OIL) and ONGC Videsh Ltd. (OVL) submitted a non-binding offer of $184 million for stakes in Australia’s Mt Marion and Wodgina lithium mines.
  • After the bidding process was reopened, the consortium revised its offer to $233 million in September 2025.
  • Nevertheless, the assets were ultimately acquired by South Korea’s POSCO, which paid $765 million for 15% stakes in each mine.
• Why India lost the bid?
  • KABIL identified several lessons from the failed transaction -
    • High asset valuations amid intense international competition.
    • Volatility in lithium prices, creating uncertainty over project profitability.
    • Wide divergence in long-term spodumene concentrate price forecasts.
    • Absence of an adequate domestic value chain for spodumene concentrate.
    • Limited time for consortium partners to complete due diligence.
    • Financial constraints and difficulties in mobilising large amounts of capital.
  • The episode demonstrates that acquiring mineral resources alone is insufficient; India also requires domestic capabilities in processing, refining, technology, logistics and manufacturing.

Chile - Financial Constraints and Institutional Delays:

• KABIL also explored a lithium brine project in Chile involving a high-value investment.
• After signing a non-disclosure agreement (NDA) in October 2025, it obtained initial access to the project's data room.
• Given the scale of investment, KABIL decided to pursue the opportunity jointly with other PSUs.
• However, due diligence could not be completed within the available timeframe, preventing submission of a bid.
• In another opportunity involving Chile’s state-owned mining company ENAMI, KABIL explored the entire lithium value chain—from exploration and extraction to processing and commercialisation.
• It eventually transferred the opportunity to CIL because of limited financial capacity and the substantial investment already required for its Argentine projects. 

Structural Challenges Experienced by KABIL:

• Four constraints:
  • Financial limitations: Critical-mineral projects require large upfront capital and have long gestation periods.
  • Commodity-price volatility: Lithium prices can fluctuate sharply, making high-priced acquisitions risky.
  • Global competition: Countries and companies with deeper financial resources can outbid Indian entities for strategic assets.
  • Geopolitical and country risks: Mining investments are exposed to regulatory changes, political instability, local opposition and resource nationalism in host countries.
• India must therefore move from a narrow “mine acquisition” approach towards an integrated overseas mineral strategy involving sovereign partnerships, risk-sharing finance, long-term offtake agreements and domestic processing capacity.

Way Forward:

• India should strengthen KABIL through greater financial autonomy, professional project evaluation, faster inter-PSU coordination and specialised mineral expertise.
• Public-sector entities can partner with private companies, foreign governments and global mining firms to distribute risks.
• Simultaneously, India needs to develop a domestic critical-mineral value chain, including beneficiation, refining, battery-material production and recycling.
• The long-term objective should be mineral security rather than ownership of individual mines.
• Diversified suppliers, strategic stockpiles, recycling, technological substitution and resilient supply chains can collectively reduce India’s external vulnerability.