The Government is crafting a production-linked incentive scheme that may provide a powerful impetus to the development of a circular economy by minimising the ecological impact of mineral extraction
The Ministry of Mines is in the early stages of designing a Production Linked Incentive (PLI) scheme to incentivise the recycling of critical minerals in India, according to The Indian Express. This PLI scheme has been purposed to promote a circular economy and comes in the wake of the tepid response to recent auctions of critical mineral blocks. If successful, this initiative could significantly reduce the environmental impact of mineral extraction and disposal.
The proposed PLI scheme aligns with the policy recommendations of NITI Aayog, the Government’s apex think-tank. It supports the Battery Waste Management Rules (BWMR), 2022, which require phased recycling of used lithium-ion batteries for electric vehicles (EVs) starting from 2026.
On May 1, 2024, the Ministry of Mines circulated a draft note on a PLI scheme for the recycling of critical minerals. According to sources, the note was shared with key government stakeholders, including several relevant ministries, for their comments and feedback.
The PLI programme, which is still being finalised, focuses on e-waste recycling, often referred to as “urban mining,” to recover critical minerals such as lithium, copper, cobalt, graphite, chromium, and silicon. Several clean energy technologies, including solar panels, energy storage systems, EVs, consumer electronics and wind turbines, are reliant on these minerals. Feedback from MNRE and MHI is crucial, given MNRE’s role in solar and wind policy and MHI’s involvement in developing the EV ecosystem.
Similar to other PLI schemes, the one being considered by the Ministry of Mines will incentivise the production of recycled critical minerals for secondary use and promote investment in advanced recycling technologies and infrastructure, according to industry sources. The amount of incentives is likely to vary based on the type and value of the recycled minerals. If successful, this scheme could not only boost the critical mineral recycling industry but also contribute significantly to the Indian economy.
Some recyclers argue that the programme should only benefit those who extract high-purity critical minerals suitable for reuse as primary inputs. Others argue for a broader scope that includes the production of black liquor, which is shredded and processed e-waste rich in minerals such as lithium, manganese, cobalt, and nickel, as most Indian recyclers cannot currently extract battery-grade minerals from black liquor.
The rapid growth of solar and wind infrastructure and equally fast adoption of EVs are expected to contribute considerably to India's mounting heaps of e-waste. i The industry estimates that solar PV module waste will increase from 100 kilotonnes (kt) in FY23 to 340 kt in 2030. In addition, 500 kt of EV batteries are expected to reach recycling units in the coming years. Research suggests that recycling critical minerals can significantly reduce the need for virgin ores and new mines.
In a report released in July 2023, NITI Aayog also pushed for a PLI scheme for critical mineral recycling. “In addition to non-fiscal incentives from states, the Government of India can also introduce a production-linked incentive on par with the ACC PLI scheme given to cell manufacturers. This will not only help the domestic recyclers but also serve the cell manufacturers selected under the ACC PLI scheme,” said the report, co-authored with the Green Growth Equity Fund.
The think tank wants key parameters for developing such an incentive to be taken on board. These include the cell chemistry of the minerals and metals being recovered, the recovery efficiency of recycled minerals and metals, and benchmarks for domestic use of recovered minerals and metals.
The need to stimulate the growth of critical mineral recycling has become all the more urgent after most of the essential mineral blocks offered by the Ministry of Mines failed to pass the technical bidding stage, which requires at least three eligible bidders. This indicates a lack of investor interest in domestic mining of critical minerals.
The new incentives will also build on the Battery Waste Management Rules (BWMR) announced by the Central Pollution Control Board in 2022. These rules require producers of batteries containing lithium, nickel, cobalt and lead to ensure environmentally sound management of waste batteries through Extended Producer Responsibility (EPR) compliance. EPR compliance, based on the polluter pays principle, holds producers to account for waste generated by their products. Producers can meet compliance by trading credits with recyclers.