Lithium is one of the fundamental elements for the energy transition and is viewed as a strategic resource by the region’s rich countries. For this reason, according to a new report, the Economic Commission for Latin America and the Caribbean (ECLAC) emphasizes the importance of developing a productive development agenda around lithium to promote its extraction for the benefit of economic activities directly and indirectly related to the mineral Associated are the agency’s special released today.
The post entitled Extraction and industrialization of lithium. Opportunities and Challenges for Latin America and the Caribbean, was presented by the Executive Secretary of the United Nations Regional Commission, José Manuel Salazar-Xirinachs. In the paper, ECLAC examines the role of the lithium-producing countries in the region (mainly Argentina, Brazil and Chile) in the global lithium-ion battery value chain (current main lithium consumption), as well as the governance, regulation and tax systems that govern the operation of the Determine mineral extraction in the countries of the so-called “Lithium Triangle” (Argentina, Bolivia and Chile). The report concludes with policy guidance that can contribute to a productive development agenda around lithium and the industrialization of this and other minerals in clean technologies for energy transition and electric mobility.
“From a state perspective, this requires policies and regulations that favor the creation of public goods, the development of capacities and soft and hard infrastructures, and the mobilization and steering of the necessary resources,” stresses the report.
According to ECLAC, lithium is a previously irreplaceable input for the production of lithium-ion batteries, a key technology for decarbonizing transport and storing energy from renewable sources. Hence, it has the potential to contribute to the economic development of countries through a positive impact of greater value creation, ie increase in product, exports, employment and tax collection.
In the region, the resource is considered strategically important in Argentina, Bolivia, Chile and Mexico as it has the potential to boost socio-economic development, value creation and production chains contributing to structural change in the economies.
The report notes that the identified lithium resources in Latin America and the Caribbean are concentrated in the so-called Lithium Triangle (56% of the world’s lithium resources). Additionally, it is possible to find lithium in smaller quantities in Brazil, Mexico and Peru, making the lithium resources found there represent almost 60% of the world’s resources. Likewise, the region concentrates 52% of the world’s lithium reserves, mainly in Chile (41%) and Argentina (10%).
He adds that the fight against climate change in view of the transition to renewable energy and electric mobility is the main driver that triggers the current and future demand for lithium (which according to the sustainable development scenario will multiply 42 times in 2040 can be). ). the International Energy Agency). Variable or intermittent renewable energy technologies and electromobility are more mineral intensive as they require greater mass and number of them.
Likewise, demand growth largely explains the exponential price increases for lithium and other minerals used in these technologies in recent years. Lithium prices nearly quadrupled between 2021 and 2022, the document said. Actors such as China, the United States and the European Union are pioneers in electric mobility and are pursuing a range of policies aimed at securing supplies of minerals believed to be critical to the energy transition.
Only three countries produce lithium on a large commercial scale in the region. In 2021, Argentina accounted for 9.8% of world production, Brazil for 0.4% and Chile for 41%. In the same year, the world’s four largest lithium producers (in order of importance: Australia, Chile, China and Argentina) concentrated more than 96% of global production, which motivated countries producing ion batteries to incorporate the mineral into lithium List of critical minerals.
The context of the energy transition and the expansion of electric mobility offer opportunities, but also pose challenges for the countries in the region that are rich in lithium resources. The region is significantly involved in the first stage of the value chain for lithium batteries (extraction/processing). But in the production stages of precursors, cathodes/anodes, cells and batteries, China, Japan, the Republic of Korea, the United States and Europe are leading.
In this sense, the most immediate opportunities for the region are those arising from lithium mining and refining activities: growing exports, creating jobs, increasing tax collection and creating upstream productive links (i.e. those related to the inputs and the obtain production). equipment needed for lithium exploration and production), ECLAC warns.
In this way, greater involvement of the region in the downstream segments (i.e. the production processes that use or consume lithium as an input) of lithium-ion cell and battery production would be closely linked to the development of a vehicle industry. This would result in large-scale power generation in the region and would require high funding, access to other minerals considered critical, and human and technological capabilities.
On the other hand, the extraction of lithium poses challenges of a socio-ecological nature, mainly arising from the water consumption in the extraction processes in areas of high water stress, the impact on biodiversity and the traditional economic activities of social groups inhabiting the salt pans (where most of the resource is extracted becomes). For that, the lithium industry will need stricter regulations and standards to ensure the sustainability of the activity, the report said.
Although resource management systems differ significantly across countries in the region, the document articulates a non-exhaustive set of policy guidelines aimed at improving the region’s potential, capitalizing on the opportunities lithium offers and better tools to calculate the Challenges that your exploitation brings.
On environmental and social sustainability issues, these guidelines relate to the need to ensure that regulations and standards meet the highest demands of society, proper management of socio-environmental conflicts, and greater transparency and civic participation. On the other hand, the text also offers reflections on improvements to tax systems to ensure better collection, progressiveness, efficiency and fairness in taxation, in line with competitiveness and greater transparency. Finally, the document highlights the potential and need for collaboration and regional integration to promote a common agenda for lithium value and production chains in Latin America and the Caribbean.