Written By: Sophie Price
Edited By: Kyra Odell
As states scramble to invest in green energy amidst our impending climate disaster, minerals critical to the success of the energy transition will be at the forefront of everyone’s attention, lithium in particular. Over the past three decades, lithium has quickly grown to be one of the most important minerals in the transition to green energy systems. Just within the last few years, the global market demand for lithium-ion batteries has experienced a steep uptick. The price of lithium nearly doubled between 2016 and 2018 alone, and this trend is expected to continue throughout the 2020s with predictions of the lithium industry growing eightfold by 2027 (Berg and Sady-Kennedy, 2021). The international strategic importance of lithium will also continue to grow as the world makes efforts to meet the increasing demand for electric vehicle batteries and clean energy. These forecasted trends suggest that control over the lithium industry could result in significant benefits in the near future, thus likely increasing the geopolitical dispute over the influence of lithium-producing regions amongst the great powers.
This is because the world is in desperate need of a lightweight but energy-dense substitute for traditional fossil fuel-produced sources of energy. In 2020, it was recorded that fossil fuels accounted for nearly 80% of the world’s total energy supply. Considering this, the International Renewable Energy Agency (IRENA) estimates that renewables will account for 91% of the world’s mixed energy supply by 2050. For renewable energy to achieve this transition, however, critical minerals such as lithium, cobalt, and nickel – all of which are used in essential semiconductors, electric vehicle batteries, and rechargeable batteries for wireless electronics – are of the utmost importance (Agrawal, 2023). This is especially prevalent in countries that have seen an exponential increase in demand for EV vehicles, which are on pace to out-demand gas powered cars.
However, this energy transition needs to happen as quickly as possible to have any chance of staying ahead of runaway rising global temperatures. In order to maintain global warming below the critical point of 1.5 degrees celsius, lithium supply would need to grow sevenfold by 2030 (Moerenhaut and Jobet, 2023). This expansion would require billions of dollars of investment and strategic geopolitical alliances with major lithium producing countries in order to steer this energy transition in the necessary direction. At the current rate, the world is not on track to meet this lithium demand, and it is expected to be at a deficit of 12.5 percent by 2030 (Moerenhout and Jobet, 2023). These supply deficits would mean an increase in lithium prices, which in turn would result in higher battery costs, thus slowing down EV development. As such, any setback to the andean lithium production, particularly in Chile because they’ve had better success in producing commercially usable lithium in comparison to their neighbors, would have a significant impact on this supply deficit and its costs.
This explains why the countries of South America’s ‘Lithium Triangle’ – Argentina, Bolivia, and Chile – have made their way to the forefront of attention on the international stage when it comes to critical mineral mining. The ‘Lithium Triangle’ is a lithium-rich region in the Andean southwest of South America that forms a geographical triangle of lithium salt flats bordering Argentina, Bolivia, and Chile (Berg and Sady-Kennedy, 2021). The United States and China in particular are pining to secure access to these bountiful reserves of Lithium for their own energy transitions. China’s mining company Ganfensig Lithium, for example, is the largest international stakeholder in Argentina’s Caucharí-Olaroz operation, which began production in 2022 and is forecasted to become one of the world’s top lithium production mines in the coming years (Berg and Sady-Kennedy, 2021). According to the United Nations Development Programme (UNDP), the Latin American continent is home to an estimated 60% of the world’s total identified lithium stores. Between the three states, there is a combined estimate of nearly 50 million tons of lithium deposits waiting to be excavated (Ellerbeck, 2023).
The Andean trio is being faced with a looming predicament, however. The price of transitioning away from fossil fuels to green energy is steep when the environmental implications are taken into consideration. While lithium exploration may prove to be lucrative for the Andean economies, the devastations of climate change and environmental degradation cannot be ignored in this regard. Lithium extraction from salt flats is a water-intensive process which is depriving the region of valuable water supply.
Mining in the salt flats uses a process called brine extraction. This is a lengthy process, often taking up to 18 months. Mineral-rich brine is extracted from underneath the salt flats and then undergoes a process of evaporation to separate the lithium from other minerals. The water-intensive nature of this process is highly concerning as it requires five hundred thousand gallons of water per ton of extracted lithium (Berg and Sady-Kennedy, 2021). In an area such as Argentina, which is already facing the most severe drought conditions in over 60 years, the water used in the extraction of these minerals is having devastating impacts on regional agriculture and biodiversity (Agrawal, 2023). Furthermore, the remaining water supply risks contamination from the chemicals used in the lithium evaporation process. Water depletion in Chile’s Salar de Atacama, one of the driest places on Earth, has also notably impacted the biodiversity of the region’s ecosystem (Berg and Sady-Kennedy, 2021).
As the demand for green energy substitutes increases, Western nations such as the United States will also be faced with a double edged sword: collaborating with these mineral producing countries to help mitigate the disastrous effects of climate change while also investing in the very mining practices that are degrading the environment in these regions and heightening the impacts of climate change. Although it is hard to say, the world will be wondering whether the Andean nations soaring to center stage within the geopolitical sphere will be a virtue or a vice. In this context, the lithium industry must find a way to balance between the economic opportunities for increased lithium extraction and the environmental deterioration caused by its extraction process.
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References:
Agrawal, P. (2023, August 17). South America’s “Lithium Triangle Countries” and Green Transition | Manohar Parrikar Institute for Defence Studies and Analyses. Www.idsa.in; Manohar Parrikar Institue for Defense Studies and Analysis. https://www.idsa.in/issuebrief/south-americas-lithium-pagrawal-170823#:~:text=Summay
Berg, R., & Sady-Kennedy, T. A. (2021, August 17). South America’s Lithium Triangle: Opportunities for the Biden Administration. Www.csis.org; Center for Strategic and International Studies . https://www.csis.org/analysis/south-americas-lithium-triangle-opportunities-biden-administration
Ellerbeck, S. (2023, January 10). Lithium: Here’s why Latin America is key to the global energy transition. World Economic Forum. https://www.weforum.org/agenda/2023/01/lithium-latin-america-energy-transition/
Falcone, M., Quattromini, N. F., Rossi, C., & Pulvirenti, B. (2022). Life Cycle Assessment of a Lithium-Ion Battery Pack Unit Made of Cylindrical Cells. Batteries, 8(8), 76. https://doi.org/10.3390/batteries8080076
Moerenhaut , T., & Jobet , J. C. (2023, May 2). Chile’s New Lithium Strategy: Why It Matters and What to Watch For - Center on Global Energy Policy at Columbia University SIPA | CGEP %. Center on Global Energy Policy at Columbia University SIPA | CGEP. https://www.energypolicy.columbia.edu/chiles-new-lithium-strategy-why-it-matters-and-what-to-watch-for/#:~:text=%5B12%5D%20Chile%20is%20by%20far