Latin America debates how to supply the world with lithium – 06/17/2023 – World

Half red, half green, the first electric bus completely powered by lithium in Argentina took to the streets earlier this month. “0% emissions”, reads the huge sticker on the window of the experimental vehicle, which can travel up to 200 km before having to return to the station to recharge its batteries.

The product that is starting to arrive in Latin America is already an old subject in Europe, the United States and China and, for it to travel for such a distance, it takes, instead of a fuel tank, an amount of the mineral thousands of times greater than than what cell phones or notebooks concentrate on.

“[Precisamos] avoid approaching the issue from a colonial perspective”, the Argentine Minister Daniel Filmus (Science and Technology) spoke at the launch of the bus, exposing the great debate that has permeated the region in recent months and will continue for years to come: what to do with the explosion of demand for lithium in the world.

While new mining projects continue to be announced, countries are deciding whether to focus on exporting to rich countries or investing in the development of local industry. They are also debating whether they are going to use it as a strategic natural resource, a priority for the State, or whether they will open up exploration to foreign investors. And it is still necessary to take into account the environmental aspects.

Latin America concentrates more than half of the lithium —already nicknamed “white gold”— identified on the planet, and most of it is centered in the “lithium triangle”, formed by Bolivia, Argentina and Chile, mainly in the salt flats of Uyuni, Puna and Atacama, where the chemical element is obtained by evaporation.

But with prices hitting record highs last year, the frontiers of exploration have expanded. Brazil, which in 2015 had practically no carbonate production, today reaches 2% of the world market by drilling rocks, a faster method and less dependent on the weather, but more expensive. Mexico and Peru are also starting to join the game, still dominated by Australia and few producers.

The main drivers of new investments in the region are Chinese, American and European companies, which compete to guarantee reserves, with an eye on the long-awaited energy transition —the replacement of fossil fuels by electricity obtained from renewable sources, mainly in the automotive sector, which is growing in long strides.

It is to these countries that almost all Latin American lithium is shipped, first passing through refineries that transform it into batteries, mainly in China, South Korea and Japan. This flow brings back the ghost of the word “colonization”, as much of the debate focuses on the question: should we just export raw materials or produce our own batteries?

“I’m worried that we could become a kind of litiferous bed to guarantee the energy transition of the Global North, reproducing a kind of neo-dependence, neo-colonialism or green colonialism”, says Bruno Fornillo, researcher at Conicet (National Council for Scientific and Technical Research of the Argentina) and coordinator of the study “Lithium in South America”.

Chilean Francisco Acuña, an analyst at mining consultancy CRU, however, counters that the region still does not have enough demand for electric vehicles. Brazil, for example, goes against the grain, by giving discounts on the sale of popular cars. “Here they are still considered a luxury item, there is no incentive. The most likely thing is that Latin American countries will continue exporting lithium, until the manufacturing price of electric vehicles is competitive and it makes sense to produce batteries”, says the engineer.

As for the exploitation of lithium, until now nations have dealt with the issue in opposite ways. The focus of the Lula government has been to attract foreign investors to extract, produce and export only lithium concentrate, with high added value, even though it is studying ways to develop the entire chain until it reaches the batteries.

A month ago, it launched the “Lithium Valley” project on the New York Stock Exchange, to encourage exploration in the Jequitinhonha Valley, in Minas Gerais. Brazil is going in the same direction as Argentina, one of the fastest growing in the sector. The neighboring country is getting closer and closer to a lithium free trade agreement with the US and, last month, saw its only two carbonate producers, one American and the other Australian, announce a merger to become a mega multinational.

Both go in the opposite direction of some Latin Americans, even though they all lean to the left. In May, the Chilean president, Gabriel Boric, caused a stir in the market by announcing on national television a new public-private lithium policy, with more state control, the creation of a National Lithium Company (which still must pass through the Legislature). and prior consultation with Andean communities.

The Mexican Andrés Manuel López Obrador went further, by enacting, in February, the nationalization of the mineral. “What we are doing now, keeping proportions, is nationalizing lithium so that it cannot be exploited by foreigners, neither from Russia, nor from China, nor from the USA. Oil and lithium belong to the nation, they belong to the Mexican people” , said the president, in a strategy that has not yet been detailed.

Bolivia, on the other hand, despite having the largest salt flat in the world, does not produce lithium on a commercial level because for decades it has adopted a model that is more closed to international investment, with opposition from the regions that harbor the resources. President Luis Arce, however, is showing signs of flexibility and in January signed an agreement with the Chinese consortium CBC to build two plants in the country by 2025.

Two months later, General Laura Richardson, head of the US Southern Command, expressed concern about “China’s aggressiveness in the field of lithium”. “This region is full of resources, and I am concerned about the evil activity of our adversaries, who take advantage of this. It seems that they are investing, when, in fact, they are extracting”, she argued in a presentation to the House of Representatives.

Within the tug of war between the two powers, the future of lithium in Latin America is still considered uncertain, as well as the impacts of the industry on the environment, which continue to be studied. The only certainty is that the appetite for it shouldn’t stop growing anytime soon.