A tweet sums up the fever for lithium these days: “Hello Elon (Musk), I’m Gerardo Morales, Governor of Jujuy (Argentina)”. This is how this provincial official opened his message to the richest man in the world after he tweeted about how the price of ore had risen to “unhealthy levels.”
“The two most important lithium production projects in the country are carried out here,” added Morales, before inviting the owner of Tesla (and potential future owner of Twitter) to invest in his province, one of the poorest in the country. In Jujuy there are some of the salt flats of the prized Lithium Triangle, as that zone of deposits shared by Argentina, Bolivia and Chile is called.
(Also read: The town of 41 people, located near a treasure longed for by the world).
Between the three South American countries they gather almost 70 percent of the world’s known reserves of lithium. A mineral wealth that some call the ‘new Saudi Arabia’, as if there, among those calcareous seas of brine in the middle of the desert, Sheikhs could appear from one day to the next, but this time of the so-called ‘white gold’.
Perhaps looking at the lavish oil kingdoms of the Arabian Peninsula, the Latin American rulers today look greedily at the lithium that lies in its subsoil. Among them, the one from Mexico, Andrés Manuel López Obrador, who has just managed to get Congress to approve a law that nationalizes the mineral. This measure equates it to another populist government, that of Bolivia, where since 2008 this product is the country’s heritage. For this reason, his president, Luis Arce, celebrated the initiative of his Mexican counterpart with another grandiloquent tweet: “The lithium of the Great Homeland must be from the people and for the people,” he wrote.
A strategic mineral
Where does this enthusiasm for a mineral until recently unknown to the vast majority of people come from? Lithium is a basic input for batteries used in devices ranging from electric cars to electronic devices such as cell phones, including photovoltaic panels. Namely, lithium is the key to the global energy transition after the 2015 Paris Agreement, when countries committed to using fewer fossil fuels. A recent report by the International Energy Agency indicated that demand for the mineral will increase 42-fold by 2040.
(Also read: Archaeologists found indigenous sculpture over a thousand years old).
Thus, one of the inputs that the world will devour in the next half century lies in great quantities in one of the poorest areas of the planet, the Andean salt flat system shared by Bolivia with 21 million tons, Argentina with 19 million and Chile with 9.8 million, according to the latest report from the United States Geological Survey. But also Peru, Brazil and Mexico have reserves.
Lithium has then become a geopolitical issue, because coincidentally today it is in the hands of populist governments. For the most part, these are presidents in favor of greater state intervention and reluctant to private capital, especially if it comes from the United States or the great European powers.
The oil lesson
But it is proven that nationalizing a natural resource with economic potential does not lead directly to the welfare of a country. A century ago, both in Mexico and Argentina, the discovery of oil, the ‘black gold’, promised to lead these countries –and others that also had oil under their feet– to definitive development. One hundred years later poverty still reigns. And in this scenario a new hope appears: the ‘white gold’.
The reality of each country is different and those of the ‘triangle’ have a great advantage: their lithium is from salar (brine), which is extracted through a decantation process that is four times cheaper than the hard rock, which is mainly exploited by Brazil, Canada, Australia and Portugal. A format similar to that found in Mexico (1.7 million tons), for now without extracting.
(Also read: Video: woman runs over thieves and flees from a trap to steal her car).
Bolivia, which has a model closed to private investment, has been dreaming of ‘white gold’ since the 1990s. When Evo Morales was president, he promised that by 2020 the country would manufacture lithium batteries. In the end, he did not keep this promise and now his successor, Luis Arce, extended it to 2024.
Argentina, for its part, adopted a mixed model that gave it better results, with the State as a partner in undertakings by companies such as the Australian Orocobre, the Japanese Toyota Tsusho and the North American Livent. It is also in talks with the Chinese Ganfeng Lithium and Jiankang Automobile, interested in extracting the ore to feed their battery factories in Asia.
Chile, meanwhile, is the most inclined to the private concession of deposits (like the North American Albemarle and the Chilean SQM). However, the new president of that country, Gabriel Boric, has already expressed his intention to create a national lithium company, with the model of what happens with copper, the main export of the southern country.
gigantic challenges
Despite some progress, the wealth under the salt flats of the three South American nations is only a promise for now. As the expert Jose Lazuen told ‘BBC Mundo’: “It is not enough to have lithium, that is not a guarantee of anything”. In other words, to convert it into prosperity, you first have to extract it and then give it added value, that is, industrialize it. For both things, money is needed, a lot of money, something that the governments that intend to turn this mineral into a national cause lack.
(Also read: Chile: Boric presents his tax reform, what taxes does he contemplate?).
“Latin American countries can dream of being suppliers of raw materials, but it is difficult to produce batteries because they do not have specialized human talent or cutting-edge technology.”, considers Héctor Córdova, a Bolivian mining consultant. “As suppliers of raw materials (lithium), these countries will be located in the first links of the value chain, those that generate less surpluses, less employment and less development,” he adds.
In other words, Evo Morales exceeded himself by imagining Bolivia as a world power of lithium batteries. In fact, he miscalculated when he closed the doors to private capital: the state company Yacimientos de Litio Bolivianos (YLB) does not take certain steps towards the industrialization of the mineral that it extracts from the gigantic Uyuni salt flat (10,582 km²), which contains the largest reserves global.
We hope that governments make rational decisions, which undoubtedly favor the interests of the countries, but also take into account the fact that they need to associate with external companies
“I think there are many factors involved so that we still cannot manufacture lithium batteries,” says Mario Grageda, a researcher at the University of Antofagasta (Chile). For this expert, our countries lack human capital, “specialists in the different areas of what the added value of lithium means.” Added to this is the lack of infrastructure and also academic strength, “centers or institutes whose main focus is lithium, which bring together multidisciplinary groups to respond to what the country wants. It is a matter of public policy, because if we have lithium and it is considered to be a strategic material, we have to work on developing knowledge.”
From Argentina, second country in world lithium reserves and fourth in production (behind Australia, Chile and China), academic Mario Rodríguez recognizes the “hope” that lithium brings. But at the same time it warns about the environmental liabilities that are being left by the companies that exploit the resource in the two undertakings underway., given the inaction of the government of Alberto Fernández, for whom the country “is going to position itself as one of the great world producers.” Rodríguez is a member of the Interuniversity Forum of Lithium Specialists, which recently published a document warning that private companies are not required to add value to their production in Argentina and that there is no national policy to industrialize the lithium extracted from the northwest salt flats. .
The populist challenge
As happened before with oil, the promises of Latin American governments about ‘white gold’ seem to collide with a geopolitical reality that condemns them to develop extractive economies, even though they possess the world’s largest reserves of the most valued product on the market.
(Also read: Cuba: General Rodríguez López-Calleja died).
Nothing guarantees that lithium can twist the course of a region that has already experienced other ‘gold rushes’ and continues to be economically backward, regardless of the ideological proclamations made by some populist leaders.
For this reason, some see various political decisions around lithium as a Chavista model that few consider the best to follow. As Cordova says, “that the countries with the largest lithium reserves are governed by populist governments adds uncertainty to the equation, which is already difficult to solve, what we do with lithium to get the most out of it. Let us hope that the governments make rational decisions, which undoubtedly favor the interests of the countries, but also take into account the fact that they need to associate with external companies so that these projects reach the industrialization phase, in which greater surpluses are generated for each other”. An expectation that for now remains in the realm of unfulfilled dreams in Latin America.
LEONARDO OLIVE
CONNECT EDITOR
More news in depth
– The woman who lost 2 sons and her daughter-in-law in a Texas migrant truck
– Chile concludes the drafting of the new Constitution, what comes next?
#Lithium #challenges #gold #rush #Latin #America