It is currently the most desirable mineral in the world. The battle for supremacy and lithium mining began long ago, but it is now intensifying sharply amid the boom in electric cars and the push for a clean energy transition. The main players here are primarily China, but also the United States, which wants to catch up on lost ground. Now, with Chile, a new player has joined.
The race is primarily in Latin America. More than half of the world’s lithium deposits are located here – in Argentina, Bolivia and Chile. There, the new left-wing government of President Gabriel Borik got the markets moving with the draft “National Lithium Strategy”. The plan Borik recently presented envisions making the state the main sponsor through a model of public-private partnerships. In addition, Chile must retain sovereignty over the resources.
Huge growth rates
Private companies can keep a maximum of 49.9 percent in new joint ventures. Chile has one of the largest lithium deposits in the world. “We cannot take advantage of this,” said the head of state. Last year, Chile increased the value of its lithium production by 777 percent to US$7.8 billion (€7.2 billion). The metal has become the country’s most important export after copper. With the new strategy, Borek is also making good on a campaign promise that includes making environmentally problematic lithium mining more sustainable.
Metals such as lithium, cobalt and rare earths, used in many products from computers to home appliances, are essential raw materials for batteries, electric vehicles, wind turbines or solar cells. According to the World Bank, production of the raw material, also known as “white gold,” will have to increase by 500 percent by 2050 to meet demand.
According to the United States Geological Survey (USGS), Bolivia tops the list with proven lithium reserves estimated at 21 million tons, followed by Argentina (19.3 million) and Chile (9.6 million). Chile was the world leader in alkali metal mining until 2015, but then was overtaken by Australia, which mined about 61,000 tons last year, followed by Chile (39,000) and China (19,000). In Latin America, Argentina in particular is catching up by leaps and bounds. According to a February report by US investment bank JP Morgan, Argentina’s production will overtake Chile’s by 2030.
The Chinese are already there
Concentrated deposits in South America’s “Lithium Triangle” brought China onto the scene years ago. The Asian country was very aggressive on the ground very early on and got lucrative deals in all three countries. In just the first three months of this year, Chinese companies pledged nearly $1 billion for lithium projects in the Bolivian provinces of Potosi and Oruro, according to the Atlantic Council think tank. In Argentina, Chery Automobile is investing about $400 million to build an electric vehicle manufacturing plant. And in Chile, a Chinese consortium has committed to invest in a lithium industrial park in the city of Antofagasta.
Benjamin Jaidan, director of the Washington-based think tank Wilson Center, told the BBC that Latin America is the “primary battleground” for lithium mining globally right now. Jidan added that the United States is lagging behind and is now trying to make up for China’s advantage. Meanwhile, the White House has explicitly prioritized securing the supply chain for critical minerals for strategic reasons. Because these provide “the building blocks for many modern technologies and are indispensable to national security and prosperity,” US President Joe Biden said last year.
At the end of January, Chancellor Olaf Scholz (SPD) was also on a raw material partnerships promotional tour in Chile. But according to observers, Germany was late in entering the global race for lithium.
The National Lithium Society is under construction
In Chile, the new strategy will be managed by the National Lithium Corporation in the future. The state-owned Codelco Copper Group will continue to be a point of contact for future partners until it is established. The Chilean private company SQM and the US company Albemarle, the #2 and #1 global lithium producers, are currently mining lithium in Chile’s only active mining region, the Salar de Atacama. Their contracts expire in 2030 and 2043. The government wants to honor the treaties but seeks to renegotiate control first.
There is already a role model for the Chilean project in Latin America. A year ago, the Mexican Congress passed a law banning the franchising of private companies to mine lithium. In the future, raw materials may only be mined and sold by government agencies in Mexico. However, lithium has not yet been mined in the country. According to the USGS, Mexico ranks 10th among the countries with the largest reserves. The quantities discovered so far amount to 1.7 million tons, which is equivalent to 2.3 percent of the global reserves.
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