From PTI news Vedanta group firm Hindustan Zinc Ltd (HZL) plans to foray into potash mining and is eyeing a block in Rajasthan which has a fair chance of having lithium reserves also, a top official of the company said.
India heavily relies on potash imports and has been exploring ways to reduce its dependence on imports. India’s potash imports primarily come from countries like Russia, Canada, Belarus, and Israel.
What’s your view on the feasibility on this? And do you think this will be beneficial for the Vedanta group?
From my perspective: the potential advantage:
The potential presence of lithium resources is highly attractive. As a critical mineral for the electric vehicle and battery industries, lithium is experiencing surging demand both in India and globally. If commercially viable lithium deposits are discovered alongside potash, the project’s return on investment could be significantly enhanced.
Additionally, the initiative benefits from strong government policy support. In 2023, the Indian government introduced the “Critical Minerals” strategy, which actively encourages the domestic exploration and development of strategic minerals such as lithium and potash.
Uncertainties:
There is a uncertainty regarding the availability and quality of resources. As of now, there is no confirmed geological evidence supporting the presence of economically viable potash or lithium reserves in the targeted block. This introduces considerable exploration risk, and a negative outcome could result in sunk costs.
The geological and environmental conditions of Rajasthan present further challenges. The region’s arid climate and complex hard rock formations are not naturally suited for potash extraction, which often depends on water-intensive solution mining techniques. The lack of abundant water resources could complicate operations and require costly infrastructure solutions.
High extraction and operational costs pose another risk. Should specialized methods or water transport systems be necessary, the resulting production costs could be significantly higher than those of major global potash suppliers like Canada or Russia, making the venture economically uncompetitive.
There are also serious environmental and social governance (ESG) risks to consider. Potash and lithium mining can lead to soil degradation, increased salinity, and groundwater contamination. Failure to manage these environmental impacts effectively may provoke resistance from local communities and environmental groups, potentially delaying or halting operations.
Finally, the project would require substantial capital expenditure (CAPEX) and face a long development timeline. With exploration, permitting, development, and construction phases typically taking 5–7 years before generating revenue, the project could put pressure on Hindustan Zinc’s balance sheet. Additionally, investors might question the efficiency of capital allocation, especially as the company moves beyond its core base metal businesses.