ECLAC: Latin America is below its potential in the lithium industry

Latin America and the Caribbean falls short of its potential to become a key player in the lithium despite its large reserves, while facing challenges to take advantage of the limited “window of opportunity” offered by the attractive industry, said Thursday the ECLAC.

In a study, the Economic Commission for Latin America and the Caribbean (ECLAC) said that the energy transition, with the advancement of electromobility and clean energy, presents opportunities for countries rich in the mineral used for electric vehicle batteries.

But the biggest challenges relate to initiatives to process it locally in the production of lithium-ion battery cells or their components.

“Latin America and the Caribbean have great potential to become a key player in the global industry of this resource”pointed out the United Nations agency.

“However, its current performance is well below that potential, as reflected in the relatively small volume of production of lithium raw materials and compounds and the high level of geographic concentration of such production in Chile and Argentina.” added.

The difficulty in keeping up with the accelerated growth in demand is explained by factors such as the chemical characteristics of salt flats and their environment or, in the case of Mexican clays, production processes still in the development stage and have not reached an industrial scale.

The price of minerals essential for the energy transition has risen rapidly due to sharp increases in demand, disruption to supply chains, and expectations of shortages and supply bottlenecks.

“In the case of lithium, the price not only multiplied almost nine times, but a significant decrease is not observed, as in the case of other minerals”ECLAC commented.

The countries of the lithium triangle (Argentina, Bolivia and Chile) have 56% of the world’s total reserves, which rises to 60% when considering the rest of the countries in the region. But at the individual level there is a significant imbalance, since Chile alone explains 41% of world reserves and Argentina almost 10%, according to the study.

“Although the region offers a promising panorama in terms of projects, its participation could fall in relative terms. While in 2021 37% of the lithium consumed worldwide came from Latin America, this figure is expected to reach 32% by 2030.he pointed.

He added that going up the value chain has challenges if it is decided to invest public resources: high financing to install cell factories; the need to access other critical minerals that are subject to strong global competition and complex technological capabilities.

“The potential benefits offered by lithium mining are often presented as a window of opportunity, which would close in the course of a few years”the report said.

The temporary limitation would be explained by the arrival of alternative technologies (sodium batteries, hydrogen cells), the arrival of new players and the recovery from recycled batteries.

“Even if these threats could materialize, the demand for lithium produced in the region would not disappear, which would also remain among the lowest-cost sources of production, given the competitive advantages that salt flats have over other types of deposits.”he pointed.

In 2021, the world supply of lithium reached levels of around 500,000 tons of lithium carbonate equivalent and 96% of production is concentrated in Australia, Chile, China and Argentina, explained the report.

Regional governments also face challenges related to improving the capture of economic rents derived from exploitation as well as the distribution and use of these “finite income” for investment in other forms of capital, he stressed.

At the environmental level, it is necessary to develop practices and technologies to improve efficiency in the use of water and energy, carry out comprehensive monitoring of salt flats, establish sustainable extraction rates and offer compensation mechanisms for the loss of biodiversity or degradation of ecosystems. .

Source: Reuters