The Race for Lithium is Heating Up in Latin America

As the US remains “grossly unprepared” to meet the exponential increase in demand for lithium, it stakes a claim to Argentina’s massive deposits of “white gold.” All for Argentina’s benefit, of course. 

The main spur for this article was a video conference last week by the Mexican geopolitical analyst Alfredo Jalife-Rahme, titled “The Lithium War Between China and the US.” Until now China has been winning that war handily, mainly because it realized the strategic importance of lithium long before the US, or at least took earlier action to secure supplies and build up the different links of the supply chain. The Asian giant is now the number one refiner of processed lithium and the number one maker of lithium batteries.

By 2020, China controlled 76% of global lithium-ion battery production capacity, while the US accounted for just 8%. As Jalife points out, between 2018 and 2021 China spent twice as much money securing lithium mining rights as the four main economies of the Anglosphere (US, UK, Canada and Australia) combined.

Now, the US and its five-eye allies are having to play catch up. Much of their attention will be on Bolivia, Chile and Argentina, the three South American nations whose borders intersect in the salt flats basins known as “the lithium triangle.” This area not only accounts for roughly two-thirds of the world’s known reserves of lithium; its lithium is also much easier to extract than many other deposits. It is here where the main focus of what Jalife calls the “lithium war” will be centered. Asked by a listener whether this will mean more coups d’état in the region, Jalife responded, with a wry, weary smile:

Yes, we need to have them on the radar. And attacks. We are going to see some strange accidents. Yep, same as always. The setting is the same,… it’s the resources that are different. This time they are strategic.

Of course, according to some reports, Latin America has already suffered one coup d’état over the white metal. In 2019, Evo Morales, the then-president of Bolivia, the country with the largest lithium deposits on the planet, was toppled by a coup. Morales and Bolivia’s current President Luis Arce blame said coup in large part on companies with commercial interests in the lithium sector, including TESLA whose CEO Elon Musk famously tweeted at the time: “We will coup whoever we want. Deal with it!”

Chile’s Undesirable Constitution

Last week, the Bezos-owned Washington Post ran an editorial kindly pointing out that Chile’s proposed new constitution needed a significant rewrite before being presented to voters this past weekend. The first reason cited for opposing the new constitution was its  environmental provisions, which would pose a serious threat to American mining companies’ ability to exploit Chile’s lithium. As you can see, even the first word of the article is “lithium”:

Lithium is a key input in batteries that run millions of laptops and upon which the United States is basing its electrified automotive future. Chile sits atop the world’s largest lithium reserves; it produced about 25 percent of the world’s commercial supply in 2020. That’s reason enough to pay attention to Chile’s impending Sept. 4 referendum on a proposed new constitution: It could recast the legal framework for mining in the South American nation, which has an 18-year-old free trade agreement with the United States.

This one paragraph almost perfectly encapsulates how Washington views most other countries on the planet — as sources of (ideally cheap) resources. And remember: this is a WP editorial, not a column, meaning it reflects the official stance of the newspaper.

That is not to say that Chile’s proposed constitution wasn’t problematic and couldn’t have done with a rewrite — just not for some of the reasons expounded by the WP. In the end, an overwhelming majority of Chileans voted against the proposed constitution, anyway, which will no doubt have pleased Bezos and the Washington establishment his newspaper speaks for (and most of the time to).

Main Target: Argentina

But it isn’t Chile’s lithium that Washington covets the most. It is Argentina’s, which is far less protected and regulated than Chile’s or Bolivia’s. It is the only one of the three where lithium is not defined as a strategic resource. The fact that Argentina’s economy is quite literally on its knees, with inflation galloping at a 30-year high of 71%, and its heavily indebted government is desperate for US dollars is an added bonus…

Read the full article on Naked Capitalism

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s