Top 10 Stocks to Watch Ahead of Critical Mineral Mine Auctions

However, when it comes to investment prospects, people have a very dim view of gold. For some, gold is a very polarizing topic in the investment community, while others swear by it.

The same goes for silver, even after its fascinating properties.

Today, the latest addition to the list of precious metals is lithium.

Soon after the discovery was made public, experts placed India on the cusp of an electric vehicle (EV) revolution.

Reports began circulating that even if India were able to tap 10% of these reserves, that would give it enough lithium to power around 60 million (m) electric vehicles in India.

The electric vehicles are powered by lithium-ion batteries which we currently import from China and Hong Kong. And if the country wants this activity to continue and prosper in the long term, it must find an alternative and cheap source.

It is no wonder that large conglomerates like Tatas are investing huge amounts to have a source of lithium batteries so that they can get their hands on these batteries directly.

Today, there has been enormous enthusiasm in government circles, in the media and in corporate India following this announcement.

The government even overcame some obstacles after the discovery so that India could take the next big step.

For example, to ensure greater private sector participation, the government has kept royalties lower. India has one of the highest royalty rates in the world as state governments see it as a major source of revenue.

But now, as private players also seek a piece of the pie, India has set mining royalties at 3% for lithium and niobium. And he kept it at just 1% for other rare earth elements. This would encourage private miners.

In July this year, the Indian government changed its mining rules in a bid to boost exploration for certain critical minerals like lithium by allowing private miners to search for these materials.

Lately, the Indian government is reportedly considering approving other reforms ahead of the crucial mining auctions.

Earlier, state governments took a long time (as usual) to approve projects declared during mining auctions.

To speed up the process, the central government has now taken matters into its own hands and decided to conduct the auction itself.

There was also a lot of uncertainty due to delays in customs clearances. So now the government is considering auctioning some mineral blocks under an “on-demand” deal with prior authorization. This would ensure faster development and extraction of critical minerals.

As we see new developments in this area, it becomes clear that the economic impact of this situation is likely being underestimated. Not much has been said about the mining megatrend.

Critical mineral mining will continue to become a more prominent topic in public market investments, as well as a critical part of lithium mining’s role in global adoption.

While details are scarce at the moment, we do know that fundamentally strong stocks in this area would do well once they are allocated certain mining sites in the auction.

Keep an eye on this aspect of lithium mining. The situation appears to be intensifying as the critical minerals auction approaches, meaning we should expect some big winners soon.

Lithium and mining-related stocks, with their strong market growth, could provide an attractive investment opportunity.

Mining companies could be the obvious beneficiaries.

This is not the case for all mining companies, as lithium is a very reactive metal. Mining and extraction is a very complex process. Investors will need to closely monitor an Indian company’s announcement that it will take this step.

Rather than focusing solely on mining stocks, you can also look at the companies involved in the mining process. And a few other proxy games as well.

You should monitor these companies engaged in the extraction of mineral products:

#1 NMDC

In line with the race for rare minerals, NMDC has partnered with Australian firm Hancock Prospecting, a company owned by billionaire Gina Rinehart, for lithium and cobalt mining.

Rinehart even had a one-on-one meeting with Prime Minister Narendra Modi during his tour of Australia earlier this year.

NMDC and Hancock are already exploring lithium mining sites in Australia as part of a comprehensive strategic partnership. Australia is the world’s largest producer of lithium and its lithium industry is more mature than that of India.

It is important to note that Australia’s lithium reserves are in the same hard rock form as India’s deposits, and any expertise gained will be an advantage.

NMDC also ventured into coal mining after securing two coal blocks from the Indian government.

#2 Coal India

This is an obvious beneficiary. This Maharatna company contributes 80% to the country’s coal production. It supplies more than 80% of its production to the electricity sector.

In a bold move to diversify its operations and further integrate into the value chain, Coal India is eyeing acquisition of lithium, cobalt and nickel assets overseas.

The company recently amended its Memorandum of Association (MoA) to include non-ferrous and critical minerals, indicating its commitment to expanding its presence in new sectors.

#3 GMDC

GMDC is engaged in the mining and production of lignite, bauxite and fluorspar. The company also owns a thermal power plant and a cement plant.

GMDC and Hindustan Copper also announced plans this year to mine rare earth metals, obviously with an eye on lithium and cobalt.

The Gujarat state government in June appointed retired bureaucrat Hasmukh Adhia as GMDC chairman.

#4 Orissa Minerals Development Corp (SODIMO)

The company is engaged in the mining and production of iron ore and manganese ore.

In March 2023, the Ministry of Environment’s expert commission recommended the granting of an environmental authorization (EC) for the company’s Bagiaburu iron ore mines.

OMDC has six iron ore and manganese mining concessions at Barbil in Keonjhar district, Odisha.

Some mines have remained inactive due to lack of required legal permits. However, the company has taken necessary steps to resolve these issues and launch mining activities.

Together, these mines have an estimated reserve of approximately 201 million tonnes of iron ore and 27 million tonnes of manganese ore.

#5 MOLD

MOIL is the largest manganese ore producer in India, with a market share of over 50%. The company has 11 mines in the states of Maharashtra and Madhya Pradesh.

The company plans to partner with Karnataka State Minerals Corporation Limited (KSMCL) to carry out exploration activities in Karnataka.

The collaboration is expected to benefit both organizations and contribute to the development of the mining sector in the state.

Apart from this, you will be able to see the latest developments regarding mining for these companies:

Please note, these are in no way recommendations.

The idea is to highlight companies in advance so that you can do your own analysis and follow their most recent developments.

These listed companies in the mining ecosystem could benefit as mining-related development continues, so you should keep them on your watchlist.

In conclusion

The hype is surely building up.

The Indian government is reportedly set to launch the auction of critical mineral mines in the coming weeks.

The mines secretary was quoted as saying: “The legal framework has been defined and the blocks have been identified.”

The tender is expected to be launched by December and bidding could begin three months later. It would be exciting to see how this all plays out.

Given everything we’ve seen so far, if you had to bet on one company that will be at the top, which one would it be?

Let us know in the comments section below.

Stay tuned and happy investing!

Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.