The global lithium rush is on. Governments and consumers are concerned about climate change and looking to reduce carbon emissions from public transit systems and vehicles, especially personal vehicles. Whether electrifying these sectors is the best way to address their role in climate change remains a serious policy question, but to a significant extent, governments, markets, and consumers have already decided: people should drive electric cars, ride electric buses, and carry out delivery by electric trucks.
There are currently two major technologies that could power this new infrastructure: lithium-ion batteries and hydrogen fuel cells. Both have significant advantages and disadvantages, but for high frequency, short distance, low volume consumer/retail use, lithium-ion batteries are usually the better option. This is due to the significantly greater energy efficiency of the technology in such applications. Hydrogen cells, by virtue of their greater energy density, are likely superior in longer range and higher volume shipping. But for the most part, further technological and infrastructural development is required before they can seriously challenge the emerging role of lithium-ion batteries in most markets.
Unsurprisingly, these developments are driving a major increase in global lithium demand. Many analysts expect the compound annual growth rate of the global lithium mining industry to run at 5-7% for much of the coming decade. Australia and China have been leaders in the industry for the last several years, but as demand grows, new players are emerging everywhere, seeking to develop new sources of the precious element. Much of this attention is focused on the so-called “Lithium Triangle.” Straddling the borders of Chile, Bolivia, and Argentina, is thought to hold a significant—even perhaps, outright majority—share of the world’s total lithium reserves.
Development of this region faces a number of challenges at the intersection of finance, politics, and environmentalism. Argentina hopes to capitalize on its vast reserves and challenge its neighbor, Chile, which is the leading South American country in the industry. On the other hand, Argentina has faced decade-long economic problems such as continually high inflation, a shifting regulatory apparatus, and relatively high taxes on mining investment. Additionally, there are important issues of public investment, political control, and environmental damage to address.
The strategic-diplomatic significance of lithium and the industries involved in extracting and processing it is also growing. China is the largest electric vehicle market in the world, and Chinese corporations dominate much of the supply and production chain of electric vehicles and their batteries. As the US and China grow more confrontational across the entire spectrum of their complex relationship, this reality adds a level of strategic state competition to what would have been a fierce economic one regardless. Recent supply chain issues, precipitated in large (if not exclusive) part by the COVID-19 pandemic, have also caused more Americans to consider the value of redundancy—and even sovereign control—in the matter of global production and transportation of vital goods and commodities. Such concerns only complement the growing salience of “reshoring” in American political discourse.
Considering the surging market for and growing strategic competition over access to lithium, the recent bidding war between Lithium Americas and Contemporary Amperex Technology Co. Ltd. (CATL) over the Argentine firm Millennial Lithium is especially significant. The Chinese-based CATL, a massive recent growth story, controls approximately a third of the global electric vehicle battery market. Lithium Americas, meanwhile, is a Canada-based company developing mining projects in Nevada and Argentina. Millennial, which had been working on a major lithium claim near Lithium Americas’ own Argentine project, was an attractive expansion opportunity for both companies. Jon Evans, the CEO of Lithium Americas, specifically cited the strategic aspect of the industry as a possible advantage to his company in winning the contest: “This transaction is a lower regulatory risk than CATL or another Chinese company. Like it or not, there’s critical mineral strategies by the US, Canadian, and Australian governments that could have played a part in this.”
The issue has come to the US as well. Lithium Americas also seeks to develop what it claims could become the biggest lithium mine in the world in rural northern Nevada. This development would provide fuel for the US’ own decarbonization goals, position it strongly in a strategic global industry, and do so on American soil with American jobs. It may even be indispensable for some of these important goals. But it would also threaten the local environment, and potentially the interests of ranchers and indigenous people. Indeed, Thacker Pass already looks set to provoke another high-profile legal and political fight in the vein of those over the Keystone and Dakota Access pipelines—only this time, over a flagship green technology. Ultimately, there are no easy answers to the questions posed by the global rush for this “white gold.”