Countries with lithium supplies and those who need them are finding a new geopolitical balance as the mineral becomes more important in global supply chains. Christina Lu reports in Foreign Policy:
The quest for a global energy transition has sparked a frenzied scramble for the raw materials underpinning everything from electric vehicles to wind turbines—and the mineral-rich countries where they are found refuse to be left out of the race.
In the coming decades, billions of tons of minerals such as lithium, nickel, and cobalt are going to be needed to power the clean energy technologies of the future. Eager to cash in on this bonanza, mineral-rich nations are unveiling policies to boost their own industries—while hoping to avoid the traps that have historically ensnared other resource powerhouses.
The world’s biggest reserves of these minerals are concentrated in a handful of nations. Australia, for example, accounts for more than half of the world’s current lithium production; Latin America’s so-called Lithium Triangle, an area covering Chile, Argentina, and Bolivia, is also rich in so-called white gold. The Democratic Republic of the Congo overwhelmingly dominates cobalt production, producing more than 70 percent of the global total, while 40 percent of nickel is currently sourced from Indonesia.
“We have this battery revolution in the next 10, 20 years, [and] mineral-rich countries are not going to be excluded from that,” said Tom Moerenhout, a research scholar at Columbia University’s Center on Global Energy Policy. “They definitely have some geopolitical power, and they will try to utilize that to their advantage.”
Just as the United States and Europe are rolling out policies to make their critical mineral supply chains more resilient, leaders in these countries are ready to play hardball, either by taking greater state control of key sectors or curtailing exports of critical materials. While Latin American powers are moving to nationalize their industries, Congo and Zambia have outlined plans to carve out special economic zones for the battery supply chain. Last week, Australia also outlined a comprehensive critical minerals strategy that funnels billions of dollars into new projects.
“It’s not just the United States with the [Inflation Reduction Act] or the EU with their Green Deal. Chile, Argentina, Australia—all of these countries now have their own natural resource [and] critical minerals strategies,” said Chris Berry, president of House Mountain Partners, an independent metals analyst. “And they all involve trying to onshore as much of that supply chain as they possibly can and capture as much of that value because it creates jobs, it generates taxes, and it gets the politicians reelected.”
Chile made the most recent move in April by unveiling a national lithium strategy that would expand state control over the sector—following closely in the footsteps of Mexico, which nationalized its industry in 2022 despite ongoing questions over how it plans to extract the minerals. Chile is the world’s second-largest lithium producer, currently accounting for about one-quarter of the global production, and Chilean President Gabriel Boric characterized the move as a necessary economic decision. “This is the best chance we have at transitioning to a sustainable and developed economy,” he declared. “We can’t afford to waste it.”
Other countries are attempting to protect their industries by blocking exports of their raw minerals. Nickel giant Indonesia has progressively tightened control of its sector by banning raw nickel exports and ordering foreign investors to process the ore domestically. More recently, both Zimbabwe and Namibia have similarly restricted exports of their raw minerals, the latest examples of governments moving to capture value chains amid explosive demand.
Those bets may not pay off. “I don’t think we are going to see that momentum disappear,” Moerenhout said. But “the second question is: Will some of this momentum be successful?”
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