Chilean lithium policy is a boost for manufacturers to diversify their supply

Chile’s decision to nationalize its food industry lithium It adds supply uncertainty for global automakers, which are facing a shortage of materials for electric vehicle batteries, and could make it more urgent to seek new sources of the metal.

The president of ChiliGabriel Boric, announced last Thursday his intention to create a new state company to control the lithium. The country has the world’s largest reserves of the metal and represents 30% of world production.

Although there are new companies working on sodium-ion batteries that could offer a cheaper alternative to electric vehicles, for many years the auto industry will be completely dependent on lithium for its batteries.

Top industry executives have warned of a supply chain crisis in the middle of the decade, as the world’s top automakers plan to spend nearly $1.2 trillion through 2030 to develop and produce millions of electric vehicles.

“Automakers may be more cautious about committing to lithium supply deals from Chile until it is clear what nationalization will look like“, said Caspar Rawleschief data officer Benchmark Mineral Intelligence.

“Most automakers will have been looking for a diversified regional supply portfolio before this anyway, but perhaps this makes other regions more attractive.”, he added.

David Brocasfounder of mineral supply chain advisory firm Voltaire MineralsHe asserted that battery metals are becoming as strategically important to countries as oil, and that automakers will need a “diversified sourcing strategy”.

Major automakers have already sought new supplies of lithium in the United States, Europe and Africa. General Motors, for example, invested in January in Lithium Americas Corp. and will help you develop the lithium mining project Thacker Passin Nevada.

This search for new options is expected to accelerate.

“We are applying a commodity roadmap that includes regional diversificationa Volkswagen spokeswoman said in an email. “So we are studying many regions”.

The Director of Technology Mercedes Benz, Markus Schaefertold reporters Monday that the automaker is “still open to direct purchase from Chile – but there are alternatives, such as Australia and Canada”.

Shares of lithium miners in Australia, the largest producer accounting for around half of global supply, rose after the announcement of Chili.

“Without lithium there are no batteries”

Chile’s move to nationalize its lithium industry follows a trend of countries seeking tighter control of key resources. Mexico it also did it with its lithium industry, while Zimbabwe, Myanmar and Indonesia have announced restrictions on various raw materials.

Santiago’s announcementwill put even more emphasis on securing UK and European lithium supplies for carmakers, which are desperate for raw materials for electric vehicles”, he wrote in an email Jeremy WrathallCEO of Cornish Lithium. “Without lithium there are no batteries or electric vehicles”.

The lithium one is not the first supply chain crisis facing the auto industry, which found itself short of semiconductors during the COVID-19 pandemic, and it is unlikely to be the last.

Rob AnsteyCEO of GDIwhich develops silicon anodes for batteries, said this should be a wake-up call for a car industry that relies on China for graphite for battery electrodes.

“If Chile nationalizes lithium, Australia can increase the supply and the United States and Europe too,” he claimed Anstey. “But if China starts restricting graphite exports, the entire global battery supply chain comes to a standstill.”

Several start-ups are developing EV batteries with silicon electrodes that store more energy, have a longer range and charge faster, but today 70% of all graphite comes from China.

Chile’s move may provide an advantage to other countries that aspire to develop their own lithium supplies.

The lithium exploration company aterian he sees extraction opportunities in several African countries, such as Morocco and Rwanda.

“These countries will attract energy transition investments that would previously have gone to Chile”, declared its chief executive, Charles Bray.