Lithium puts Chile, Argentina and Bolivia in the spotlight
White gold, or white petroleum: lithium is going to play a crucial role in the electrification of transport, hence we’d better watch Chile, Bolivia and Argentina, who own more than half of the global lithium reserves.
Lithium is a crucial part of lithium ion batteries, the current dominant battery technology. Whereas laptops and smart phones require a few grams of lithium, the amount needed for car batteries will increase global demand enormously. The International Energy Agency estimates that 1 million EV batteries – the amount of EV sales in 2017 – accounted for 9% of the global lithium demand in 2017. The main concern of the car industry will be to ensure lithium supply in order to control the price of batteries, and of EVs.
The Lithium Triangle
Chile is the second biggest lithium producer in the world, after Australia. Together with Argentina and Bolivia, Chili contains more than half of the global lithium reserves. Due to favourable political circumstances, Chile is the frontrunner in the region. Recently the Chilean lithium-mining company SQM even received the permission to ramp up production, demonstrating the business-friendly attitude of president Piñera.
The same is about to happen in Argentina, where investment fell behind due to the protectionism of former president Cristina Fernandez de Kirchner. The incumbent president Mauricio Macri on the other hand, stimulates foreign investment, with measures such as ending an export tax on mineral products.
Bolivia lags behind, despite owning the highest quantity of lithium. In particular, the market unfriendly attitude discouraged foreign investors. Nevertheless, this is about to change, since president Evo Morales put the lithium industry high on the agenda and is looking for foreign investment.
The abovementioned dynamics might change the global lithium industry, in which OEMs have recently been trying to find new inroads as well.
Image: lithium mine in Western Australia