In today’s Finshots, we explain why everyone’s excited about the discovery of 5.9 million tonnes of Lithium in Jammu & Kashmir. And why we need to tread with caution.

The Story

If the world wants to achieve net-zero carbon emissions, what’s the most important thing we need?

Lithium!

See, most of these harmful emissions like Carbon Dioxide and Methane are generated when we burn fossil fuels. So if we need to cut back on emissions, we must dump fossil fuels. We have to switch to alternatives — electric cars and renewable energy.

And that’s where Lithium comes in. Or more specifically, lithium-ion batteries. These things power electric cars. And come in handy when we need to store solar and wind energy for later use.

But why lithium, you ask?

For starters, it’s actually the lightest metal in the world. So it makes the batteries relatively lighter too. It won’t weigh down a car. It can also pack lots of energy in less space. While a typical lead-acid battery stores only 25 watt-hours (Wh) of energy per kg, lithium-ion batteries pack 150Wh per kg. They also last much longer than other batteries and can live through multiple charge cycles. There’s nothing else quite like it.

So, if everyone’s targeting net-zero emissions, you can imagine that lithium will be in red-hot demand. And countries that have abundant lithium reserves will be rubbing their hands in anticipation too. Including India. Because on 9th February, the government announced the discovery of 5.9 million tonnes of lithium deposits in Jammu and Kashmir.

Suddenly, everyone’s excited. Media and YouTube headlines scream how India is definitely going to be an EV superpower thanks to these deposits. We can soon export to the world.

Or can we? Because there are two things we need to point out here.

Firstly, we aren’t sure if it’s an economically viable source of deposit yet. The 5.9 million tonnes is just a preliminary estimate.

See, when it comes to mineral deposits, we typically need to pass 3 levels of evaluation. The first level is called the ‘inferred’ level. This means the authorities have extracted a few samples and looked at the evidence. The evidence then implies that deposits of a certain grade exist. But it’s not verified fully yet. So we refer to the deposits as a resource and not a reserve. We have to exercise caution at this point.

And right now, the discovery in J&K is at this lowest level of confidence. It’s still ‘inferred.’

The next step is to undertake more samples and research. And based on the evidence, the level gets upgraded to ‘indicated’. It basically means that the authorities are more confident about the extent to which deposits are present. At this stage, they can slowly begin planning mines and put some hard numbers on the economics of extracting lithium.

And finally, we have the ‘measured’ status. This is the highest level of confidence that authorities can place in the deposits. At this stage, we can be pretty sure about the extent of deposits that can be mined, extracted, and commercialized. And we can typically begin calling it a reserve. Not just a deposit.

So yeah, since we’re at the ‘inferred’ level, we’re still some time away from exploiting any lithium. And our past experience should teach us patience too. See, a couple of years ago, the media had gone ballistic over the discovery of 1,600 tonnes of lithium in Karnataka too. And the Atomic Minerals Directorate for Exploration and Research (AMD) had to actually publish a notice asking people to relax. It said and we quote:

“…unless a proper technology/method is available to profitably extract lithium from its ore, the real benefit of exploration may not be there. With the data presently available with AMD, the actual economic benefits of the exploration cannot be estimated at this stage.”

And it has been a while since we heard anything about these deposits too. So we can’t be sure of how far we’ve come. Whether it’s viable or not. The discovery in J&K is pretty much in the same boat. We don’t know yet if it’s economically viable. And even if it is, the mining and extraction won’t happen overnight. It’ll take time. Maybe 10 years or more. So we need to temper our enthusiasm just a little.

And secondly, even if our research shows that it’s economically viable, we need to be sure that it’s environmentally viable too. Because if we’re not careful, this metal that’s supposed to lead our transition into a clean energy future could first end up destroying our ecosystem.

Just look at Chile, Argentina, and Bolivia which hold more than 50% of the world’s proven lithium reserves. It’s the Lithium Triangle of the world. And most of the lithium in this region is found underneath the famous salt flats of these countries.

But there’s a cost to mining it.

You see, in order to get the metal, minors first pump the lithium-rich saltwater or brine from underground onto the surface. They let it evaporate and harvest the lithium from that. Pumping and washing these deposits needs a lot of water too. It takes 2,000 tons of water to produce 1 ton of lithium.

This also affects the groundwater levels. And when the groundwater recedes, it pulls in water from freshwater reservoirs that people and their cattle use. This hurts the local communities who depend on these lands for their livelihood. Their crops suffer and their cattle don’t get enough water too. The rivers and lakes are disappearing as a result of this egregious use of local water resources.

Then there’s the impact on wildlife. For instance, the saltwater lakes in this area are prime habitats for certain species of flamingos. But as the water levels decline due to mining, their food sources are affected. And the flamingo population has dropped by 11% in the past decade. It hurts the ecosystem which relies on these birds to regulate it. It could even spell the loss of a major ecotourism attraction that brings in money.

Sure, these are not the same environmental problems that J&K could face. But mining in the Himalayas could open a whole different can of worms. Especially since it’s a very young geographic formation that’s prone to earthquakes and land subsidence.

So yeah, we need lithium to transition to a greener world. But it can come at the cost of massive environmental damage in the mining process. And assuming that we can extract the 5.9 million tonnes of the mineral, trying to reconcile this paradox will be the biggest challenge in India’s quest for Lithium superpower status.

Until then…

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Ditto Insights: Why Millennials should buy a term plan

According to a survey, only 17% of Indian millennials (25–35 yrs) have bought term insurance. The actual numbers are likely even lower.

And the more worrying fact is that 55% hadn’t even heard of term insurance!

So why is this happening?

One common misconception is the dependent conundrum. Most millennials we spoke to want to buy a term policy because they want to cover their spouse and kids. And this makes perfect sense. After all, in your absence you want your term policy to pay out a large sum of money to cover your family’s needs for the future. But these very same people don’t think of their parents as dependents even though they support them extensively. I remember the moment it hit me. I routinely send money back home, but I had never considered my parents as my dependents. And when a colleague spoke about his experience, I immediately put two and two together. They were dependent on my income and my absence would most certainly affect them financially. So a term plan was a no-brainer for me.

There’s another reason why millennials should probably consider looking at a term plan — Debt. Most people we spoke to have home loans, education loans and other personal loans with a considerable interest burden. In their absence, this burden would shift to their dependents. It’s not something most people think of, but it happens all the time.

Finally, you actually get a pretty good bargain on term insurance prices when you’re younger. The idea is to pay a nominal sum every year (something that won’t burn your pocket) to protect your dependents in the event of your untimely demise. And this fee is lowest when you’re young.

So if you’re a millennial and you’re reading this, maybe you should reconsider buying a term plan. And don’t forget to talk to us at Ditto while you’re at it.

1. Just head to our website by clicking on the link here

2. Click on “Book a FREE call”

3. Select Term Insurance

4. Choose the date & time as per your convenience and RELAX!