Exclusive-Indian state firms seek stake in SQM's lithium projects in Australia, sources say

NEW DELHI (Reuters) - Four Indian state firms are in talks with Chilean miner SQM to acquire a 20% stake in its two lithium projects in Australia for $600 million, four sources said, in New Delhi's biggest effort to secure supplies of the key EV battery metal.

Government-backed Khanij Bidesh India Ltd (KABIL) has partnered with Coal India, Oil India, and ONGC Videsh to seek the 20% stake in SQM's Mount Holland and Andover lithium projects in Western Australia, the sources said.

The sources did not wish to be named as the deliberations were not public.

SQM is the world's second-largest lithium producer. India, the world's fastest-growing major economy, has intensified efforts to secure a steady supply of lithium, anticipating a surge in demand for the EV battery metal, which is critical to reducing carbon emissions from the world's third-largest emitter. "This is so far India's biggest attempt to secure lithium supplies overseas," one of the sources said. "The due diligence is on, and the companies have expressed their interest with an initial offer."

KABIL, along with the three state companies, is in the process of appointing a mergers and acquisitions adviser for the deal, the sources said.

SQM, KABIL, Coal India, Oil India, and ONGC Videsh did not respond to Reuters' requests for comment.

India's plans to acquire stakes in SQM's projects have not been reported previously.

New Delhi formed KABIL - a joint venture between the state-owned National Aluminium Company, Hindustan Copper, and Mineral Exploration and Consultancy - a few years ago to acquire, develop, and process strategic minerals overseas for use in India.

India has recently stepped up efforts to secure overseas agreements for accessing critical minerals in resource-rich nations like Argentina, Australia, and Chile. New Delhi is also exploring an initial agreement with cobalt-rich Congo. Last year, KABIL signed an exploration and development agreement with a state-owned firm in Argentina for the exploration and mining of five lithium blocks. Amid growing energy needs, India is trying to encourage EV production to reduce its reliance on fossil fuels.

EV sales in India accounted for just 2.5% of the 4.3 million cars sold in 2024, but their 20% growth rate outpaced the overall car market's 5% growth. Analysts expect sales to double in 2025 from 100,000 units in the previous year, mainly due to new launches.

(Reporting by Neha Arora; additional reporting by Melanie Burton in Melbourne; editing by Mayank Bhardwaj and Sonali Paul)