The Lithium Triangle is an space between Argentina, Bolivia, and Chile, encompassing near 60% of the world’s lithium assets.
With round 45 million tonnes mendacity beneath the huge salt flats between the three nations, it’s stunning that the Triangle struggles to extract lithium. Lithium-ion batteries are essential for the event of electrical autos, particularly with US President Biden saying that he desires half (round eight million) of all automobiles bought within the US to be electrical by 2030.
Lithium water torture
Lithium requires huge quantities of water to extract, roughly 500,000 gallons of water per ton of lithium extracted, posing severe environmental issues provided that the Lithium Triangle is without doubt one of the driest locations on earth.
Whereas Chile is the second largest producer of lithium on this planet, Argentina and Bolivia have traditionally struggled to extract important portions. With manufacturing needing to extend by 9 instances to satisfy net-zero targets, the nations should discover an optimum financial mannequin to ramp up extraction.
Chile
Chile is the largest producer of lithium in South America, which is anticipated given extraction started in 1984. Earlier than 2023, lithium was solely extracted by two firms: SQM and Albermale. These firms have lengthy felt the ire of the Chilean public for a few causes—apart from the truth that SQM’s principal stockholder and Chile’s ‘Lithium King’ is the son of former dictator Augusto Pinochet.
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Firstly, SQM and Albermale are personal firms that share income with shareholders somewhat than Chileans. Secondly, there was important environmental harm within the salt planes the place lithium extraction befell. Decrease water ranges have resulted within the indigenous flamingo inhabitants dropping by 10% since 1983, in addition to locals struggling to farm and mine. The unrest brought on by these components partially compelled Gabriel Boric, the president of Chile, to all-but nationalise the lithium trade final yr.
Following this announcement, inventory costs of Albermale and SQM fell by 11% and 19%, respectively, regardless of SQM being granted mining rights within the Atacama Desert till 2060. Boric has promised to honor prior agreements with firms, with the one viable path for future funding being by partnerships with the federal government. Given the dearth of parliamentary finalisation and long-term excellent contracts, it will likely be some time till we see the results of nationalisation on the Chilean public and economic system.
Bolivia
Bolivia is the laggard of the group but has excessive goals, with President Luis Acre desirous to make lithium-ion batteries regionally by 2025. Regardless of investing lots of of thousands and thousands of {dollars} into the trade, lithium extraction stays poor.
Lithium manufacturing requires specialist tools that Bolivia can’t supply regionally, leading to rushed openings of extraction crops utilizing untested tools. Infrastructure within the area is proscribed and the altitude of the salt flats additional this drawback. Concurrently, in keeping with a US geological survey, giant quantities of Bolivian lithium include magnesium, making the reserves commercially unviable.
Political instability has been rife in Bolivia. There have been greater than 190 coups for the reason that formation of the state in 1825, the latest of which occurred in June 2024, furthering an already tense relationship with the Bolivian folks.
Manufacturing is run by YLB, Bolivia’s nationwide lithium extraction agency, and is designated as a strategic useful resource. This has resulted in a suboptimal international funding local weather because of Bolivia favouring a sluggish however sovereign entrance to the worldwide market.
Regardless of turning away Western traders, final yr Bolivia signed offers with Chinese language and Russian consortiums to help funding within the salt flats. Bolivia sits on the biggest reserves of lithium on this planet however is unable to take advantage of its place because of an unfavourable funding local weather and poor infrastructure.
Argentina
Probably the most promising nation of the three to traders is Argentina, which elevated its lithium manufacturing by 79% from 2023 to 2024 in keeping with GlobalData. The current election of Javier Milei has confirmed promising to companies, as his decentralised method has attracted traders from internationally. GlobalData forecasts that Argentina will improve its lithium manufacturing to 500,000 tons by 2030, changing into the second-largest producer of lithium on this planet by 2026. Milei gives lax regulation for potential companies, along with his openness aiming to extend the quantity of salt flat amenities from the present two.
Greater than 30 world mining conglomerates have encroached on the area, usually being rewarded with contracts with out consulting or notifying the Argentinian inhabitants. Transparency is a key challenge in Argentina with sweeping constitutional reforms to the Jujuy province being ushered in a single day behind closed doorways.
These reforms modified the correct to indigenous land and to display. With rising quantities of Chinese language employees changing Argentinians, and ever-present inflationary pressures, Argentina is probably not as steady as traders consider.
The distinction in success between the three nations lies in economics and geography. Pinochet recognised the potential of lithium extraction early on, redistributing his financial assets to maximise output whatever the human and environmental prices. Chile additionally designated lithium a strategic mineral 12 years in the past, pushing the nation as much as the second greatest producer of lithium on this planet.
Unfavourable geographic and funding climates in Argentina prevented important industrial growth, with Bolivia struggling to mobilise its giant, albeit fairly poor, workforce to extract the mineral. Argentina has the biggest progress, Chile has a head begin but is flatlining, and Bolivia has probably the most untapped assets but can’t produce.
OLEC?
Final yr, Mexican president Andres Obrador recommended that an OPEC (Organisation of the Petroleum Exporting Nations) sort organisation for lithium can be splendid to advertise progress within the space.
With the demand for lithium growing, a Lithium Triangle organisation with Brazil and Mexico would management 65% of the world’s lithium and 35% of present manufacturing.
Nevertheless; that is unlikely as lithium isn’t like oil; it isn’t traded like a specialist product or main commodity, making it more durable to standardise the value.
Greater lithium costs will make it viable for different nations to develop lithium deposits that had been beforehand too costly. Chile’s nationalisation and Bolivia’s perpetual struggles to mobilise its reserves, mixed with Argentina’s political and financial instability, present that the Lithium Triangle is a area rife with points but an space that may decide the way forward for humanity.
These nations should discover stability and a technique to effectively extract lithium if we’re to satisfy local weather targets.