Exploitation and Future Prospects for Lithium Industry in Latam

March 22, 2024 Hour: 9:00 pm

One of the essential minerals for the energy transition that humanity needs is lithium. This mineral is of vital importance for electric vehicle batteries, but also for cell phones and energy storage batteries.

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Until 2022 Australia was the largest lithium producer on the planet with an estimated volume of 55 thousand metric tons. In Latin America, the largest producer is Chile, followed by Argentina, Mexico and Bolivia. Unlike lithium found in other regions of the world, which is extracted in hard rock quarries, in Latin America the largest reserves are found in brines, which are large natural deposits where salt and lithium accumulate, generally at considerable heights above sea level. Bolivia, Peru, Chile and Argentina have the largest deposits with these characteristics.

It is estimated that by 2050 an annual production of 11.2 million tons of LCE (Lithium Carbonate Equivalent) will be needed. In view of this immediate future, Latin American countries that have considerable proven reserves of the coveted mineral are preparing to be at the forefront of world production. They are also planning to start the production of batteries and other accessories in their territories in order to go beyond the export of the raw material.

Precisely following this trend, the President of Mexico, Andrés Manuel López Obrador, said that he intends to launch a call for U.S. and Canadian companies to participate in the construction of infrastructure to exploit the country’s lithium. “Lithium already belongs to the nation and in all cases there must be an association between the public company and private parties,” said the Mexican president. This same trend is being followed by Bolivia, one of the countries with the largest reserves of the mineral and which is currently partnering with Chinese companies to begin the industrial exploitation of the quarries. Recently, the current government of Luis Arce signed an agreement with the Chinese consortium Catl Brunp and Cmoc (CBC). Consolidating the lithium industrial project is one of the main objectives, according to Bolivian authorities.

Argentina has an ambitious project to become the world’s second largest lithium producer by 2030.

The president of Chile, Grabiel Boric, referring to the lithium boom said: “It is an opportunity for economic growth that is unlikely to be repeated in the short term.” Undoubtedly, the authorities of these countries know that they have the opportunity to obtain substantial business opportunities and want to keep their distance from the historical way in which underdeveloped countries have managed resources. They seek to manage win-win alliances between their economies and large international companies by attracting foreign investment to provide the necessary technology to start up the exploitation of large reserves. So far, the country that has benefited the most from these proposals is China, which maintains a win-win international policy in its companies, betting on mutual benefits. As a result, the Asian giant is now the largest producer of batteries and accessories in the global electric car industry.

But is Latin America prepared to take advantage of the economic opportunity to exploit the mineral and at the same time take care of the ecosystems that are home to these reserves?

With the exception of Mexico and Peru, lithium reserves are located in salt flats where biodiversity is as fragile as it is unique, and the eventual increase in lithium mining is of concern to communities, scientists and conservationists. So far, the process to obtain lithium involves the evaporation of millions of liters of water putting these ecosystems at risk. Although expectations are directed towards direct extraction technologies, there is still no convincing evidence that they effectively reduce environmental damage.

Globally, lithium is already playing a major role in electromobility and energy storage. Lithium plays a key position in the global energy transition and so far there is no technological substitute, so there is a global race to secure its supply. We do not know how long this race will last, but it will not be short. Latin America is more than ever in an advantageous position, with every indication that it will not let up in its efforts to win the lithium rush.