Mines Secretary Warns Against ‘Squatting’ on Mining Blocks as Lithium-Nickel Processing Scheme Nears Launch

The news

New Delhi. Some miners hold on to their blocks without starting operations on time, a practice Union Mines Secretary Keshav Chandra called ‘squatting’ and a concern the industry must address, speaking on Tuesday at the 60th Annual General Meeting of the Federation of Indian Mineral Industries (FIMI), The Hindu and The Indian Express report. Mr. Chandra explained that mining begins after an “arduous” process of approvals, including forest and environment clearances. Once the mining lease is signed, miners are expected to begin operations within a “substantial” period, yet some do not. “It affects mineral wealth [of the country]; the production gets compromised,” he said, adding that he had asked members to speed up operations and not violate the rules. “Squatting is not going to help anybody. It is a speculation, so no activity should promote any speculation,” he said. In plain terms, a company that wins a block may sit on it, treating it as an asset that can gain value, instead of producing from it. Separately, he said India is looking “very openly” at a Russian lithium extraction project in Mali, West Africa. Russia’s State Atomic Energy Corporation had approached India last year; the pact was reportedly put on hold over Mali’s political instability. He also said a “very substantial” scheme for domestic processing of lithium and nickel would be launched “very soon” to localise the whole battery ecosystem that relies on the two minerals; details will follow once approvals are received, The Indian Express reports. In April, former Mines Secretary Piyush Goyal had said two unnamed electric-vehicle minerals were shortlisted for a processing policy. The government has also identified four States for critical mineral processing parks, each planned as a complete ecosystem for one mineral. Gujarat, which already has heavy rare earth elements and has developed beneficiation (upgrading raw ore into a richer concentrate) and processing technology, and Andhra Pradesh, identified for a rare earth corridor, will focus on rare earths. Odisha, which has its own nickel reserves and whose eastern location makes it easier to process nickel imported from Indonesia and other countries, will take nickel, and Maharashtra lithium. India has little processing capacity for critical minerals and is 100% import-dependent for cobalt, lithium, nickel, rare earth elements and silicon. It moves two factors of production: land locked in idle leases and capital for processing at home. The syllabus link is GS3 (mineral resources, industrial policy).

Static syllabus linkage

1. The MMDR Act makes auction the only door into mining and sets deadlines for production. The Mines and Minerals (Development and Regulation) Act, 1957 is the parent law for all minerals except petroleum and natural gas. Its 2015 amendment made auction the only method for granting mining leases and composite licences, fixed lease periods at 50 years, and created District Mineral Foundations and the National Mineral Exploration Trust. Under Section 4A(4), a mining lease lapses if production does not begin within two years of the lease being executed, or if mining is discontinued for two years, though the State Government may extend this period on application. States grant most leases and receive royalty, because minerals fall under Entry 23 of the State List subject to Union regulation under Entry 54 of the Union List.
2. The 2023 amendment gave the Centre control over auctioning critical minerals. The Mines and Minerals (Development and Regulation) Amendment Act, 2023 added a Part D to the First Schedule listing 24 critical and strategic minerals, and empowered the Central Government to auction concessions for them. It removed six minerals, including lithium, from the list of atomic minerals, so that private companies could explore and mine them. It also created an exploration licence to attract private exploration for deep-seated and critical minerals. The Ministry of Mines had separately identified 30 critical minerals in 2023, and the National Critical Mineral Mission was launched in 2025 to cover exploration, processing, recycling and overseas acquisition.
3. Processing, not mining, is the real chokepoint in battery minerals. Mining yields ore, but a battery needs refined chemicals such as lithium carbonate or nickel sulphate, which require processing plants, reagents and technology. China dominates this middle stage for lithium and rare earths and in December 2023 barred the export of rare earth extraction and separation technologies. Indonesia banned exports of nickel ore from 2020 to force processing at home, which is why imported Indonesian nickel is now mostly available as processed intermediates. India’s production-linked incentive scheme for advanced chemistry cell batteries, approved in 2021, supports cell manufacturing, but cells need processed minerals as inputs.
4. India secures minerals abroad through KABIL and partnerships. Khanij Bidesh India Ltd (KABIL) is a joint venture of three public sector companies, National Aluminium Company (NALCO), Hindustan Copper Ltd (HCL) and Mineral Exploration and Consultancy Ltd (MECL), set up to acquire critical mineral assets abroad. It signed an agreement in 2024 for lithium exploration blocks in Argentina’s Catamarca province. India joined the U.S.-led Minerals Security Partnership in 2023. At home, the Geological Survey of India reported inferred lithium resources in Reasi district of Jammu and Kashmir in 2023, but inferred resources are an early-stage estimate, not a mineable reserve.

Why UPSC loves this

1. GS1 and GS3 both ask about the distribution and security of mineral resources. The GS1 syllabus covers the distribution of key natural resources across the world, including South Asia, and GS3 covers infrastructure and industrial policy. Questions on critical minerals, rare earths and supply-chain dependence on China have become regular since the energy transition gained pace. The four-State processing plan is a ready map-based example.
2. Prelims loves the MMDR Act’s schedules and the list of critical minerals. Statement-based questions can ask which authority auctions critical minerals, which minerals were removed from the atomic list, or what KABIL is. Mineral locations, such as nickel in Odisha or rare earth beach sands along the east coast, are classic geography material.
3. Mains links mining to land, federalism and speculation. UPSC has asked about the problems of the mining sector and the balance between development and environment. ‘Squatting’ adds a governance dimension: an allotted resource that is not used is a loss to the State’s revenue and to the country’s production.

Analysis

1. Squatting is a predictable result of how blocks are sold. When a company bids a high premium for a block, it is buying an option on future mineral prices as much as a place to mine. If prices are low or clearances slow, waiting is cheaper than producing, and a block held idle can also keep a rival out. This is speculation in the economist’s sense, and Mr. Chandra is right that it defeats the purpose of auctions. The law already allows a lease to lapse after two years without production, but extensions and slow enforcement blunt the threat. The fix is tighter milestones with automatic forfeiture of performance security, enforced consistently by States.
2. The miners’ counter-argument about clearances is partly valid. Mr. Chandra himself described the approval process as “arduous”, covering forest and environment clearances. Land acquisition, consent of gram sabhas in Scheduled Areas and the transfer of forest land can take years, and a company delayed by these is not squatting. A blanket label risks punishing firms for the State’s own delays. The administrative task is to separate firms stuck in the pipeline from those that have all clearances and still do not produce. Publishing a block-wise status of clearances and production would make that distinction visible.
3. One-mineral-per-State parks make sense only where feedstock is secure. Grouping processing, reagent suppliers and skilled labour around one mineral lowers costs through clustering. Gujarat’s existing heavy rare earth technology and Odisha’s nickel reserves plus eastern port access are real advantages. Maharashtra’s lithium park, however, would depend almost entirely on imported ore or concentrate, since India produces no lithium at scale. A park without assured feedstock becomes an empty industrial estate, so the lithium plan must be tied to overseas supply contracts through KABIL or private firms. The counter-view is that processing hubs everywhere, including Japan and South Korea, run on imported ore, so location near ports and demand can matter more than local mines.
4. Mali shows the price of chasing minerals in unstable places. Resource security pushes India towards countries others avoid, and a Russian state partner in Mali combines two kinds of risk. Mali has seen military takeovers since 2020, left the Economic Community of West African States, and revised its mining code in 2023 to raise the state’s share in projects. Partnership with a Russian state corporation also carries sanctions exposure at a time when the U.S. has just armed itself with tariffs against buyers of Russian oil. Mr. Chandra’s careful words, “looking at all the possibilities”, suggest exploration rather than commitment. The counter-view is that stable jurisdictions are already contracted by richer buyers, and late entrants must accept higher risk to gain any access.
5. A processing scheme will succeed on technology and assured buyers, not subsidy alone. Processing plants are capital-heavy and profitable only at scale, and China’s ban on exporting separation technology means India must develop or license it from elsewhere. A subsidy can close a cost gap but cannot create know-how. The scheme should therefore be linked to demand from battery cell makers under the existing incentive scheme, so that processors have buyers. It should also include recycling of used batteries, which can supply lithium and nickel without new mining. Without that link, India risks building capacity that cannot compete with Chinese prices.

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