Latin America is at the center of the geopolitical competition for the control of lithium: experts

Due to its large lithium reserves, Latin America “is at the center” of the competition between China and Western powers for control of the so-called “white gold”, a key piece in the global energy transition, experts on the subject said on Tuesday.

Argentina, Bolivia and Chile make up the Lithium Triangle, which houses almost 60% of the world’s lithium resources (some 52 million metric tons), which puts these South American nations in the crosshairs of nations that seek to get rid of dependency China as a supplier of critical raw materials, especially in the coming decades.

“As a key enabler of the energy transition, lithium has figured prominently in the geopolitical competition between Western countries and China (…) Latin America is at the center of that competition, in which China is already far ahead in the region compared to the West,” said independent energy expert Patricia Vásquez.

During a panel sponsored by the Wilson Center, a think tank Based in Washington, Vásquez indicated that China’s presence in the region is growing in the lithium sector, where Beijing maintains considerable investment projects.

Lithium-ion batteries (also called Li-Ion or LIBs) make it possible to store renewable energy, either in small format for portable electronic devices such as laptops and mobile phones, or larger, such as those used in electric vehicles (EVs).

Vásquez recalled that in Argentina there are “six lithium projects under construction that are expected to start producing in the next two years”, of which four have Chinese participation.

A similar situation is seen in Bolivia, where four of six recent tenders to develop environmentally friendly extraction technologies have been won by Chinese companies.

In Chile, the automobile manufacturer BYD secured lithium at preferential prices in exchange for manufacturing cathode lamps, warned the associate researcher at the Wilson Center and moderator of the panel.

Other Latin American countries with great potential in the lithium industry are Brazil, Peru and Mexico, the latter with a high probability of becoming a major producer in the region in the near future, the specialists predicted.

Cut dependency on China

According to analyst Henry Sanderson, the future scenarios in which competition between China and the West in Latin America could develop is “very difficult to predict.”

“What we can see already happening is an increase in tension, and this is part of, you could say, the deterioration of US-China relations,” said Sanderson of Benchmark Mineral Intelligence, a US-based reporting agency. prices and authority on lithium ion and electric vehicle battery information.

Also read: Chilean government announces ambitious plan for lithium exploitation

According to Sanderson, there is “a lot of pressure” from politicians in the US and Europe to “create supply chains that are less dependent on China.”

In the case of the US, “steps are already being taken,” said the specialist in reference to the Inflation Reduction Act, sanctioned by Biden in August 2022, to strengthen the technology industry and give the country autonomy by promoting local manufacturing of microprocessors, compared to the Asian giant. The legislation includes an investment of some 369,000 million dollars.

Although the political will is already there, “this is not something that can happen overnight,” Sanderson insisted. “We’re talking about building completely new industries, (…) which requires a lot of investment, a lot of experience. So it can’t happen quickly.”

“The West would like more Western companies to invest in Argentina and Chile, but they cannot force companies to invest. We have also seen that the big Western mining companies have not moved towards lithium,” he added.

Sanderson predicted that in the future, perhaps what will be seen is an increase in joint ventures between the West and China, although he reiterated that even if there is government will, administrations cannot force companies that “simply have not seen the interest or do not have appetite to enter” the lithium production market in Latin America.

Of course, “we need all the lithium we can get”, stressed the analyst in reference to the importance of the element for the energy transition and the manufacture of electronic devices.

The world is not running out of lithium

According to recent studies, global lithium production will need to nearly quadruple by 2030 if projected global demand for lithium-ion batteries is to be met.

However, “the world is not running out of lithium, in fact, there are sufficient reserves to meet absolutely all expected demand,” researchers John Graham and John Rupp said in a paper. report on the situation of the element in Latin America presented this Tuesday by the Wilson Center.

“Our research suggests that the future of lithium exploitation in South America is uncertain, even if the necessary policies are in place to promote it,” said the professors from Indiana University, in the United States.

For the experts, a “significant expansion of lithium production will only be achieved if efforts are increased to understand and minimize the economic and ecological risks of mining activity.”

“Well-designed policies are needed to ensure that neighboring communities receive tangible and lasting benefits from lithium exploitation,” they stressed.

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