Chilean lithium shows challenges on the path to clean energy

Growing opposition to new lithium contracts in Chile is the latest indication of how difficult it will be for the world to produce the building blocks of the clean energy transition.

In the last months of his mandate, the Government of the President Sebastian Piñera is about to grant new production quotas in an effort to tap into the world’s largest reserves.

This comes at a time when battery metal prices are hitting all-time highs thanks to growing demand for electric vehicles.

Previously, these efforts would have met with little resistance, given the abundance of lithium that hides under the Chilean salt flats and how clean and easy it is to produce compared to the hard rock mining practiced at the main producer, Australia.

After all, those who win the new contracts will still have to carry out exploration work and go through all the usual permits before the projects can be developed.

But politics, and environmental and social sensitivities, have changed.

Piñera, 72, is about to hand over power to the 35-year-old leftist Gabriel Boric, whose team accuses the outgoing government of trying to rush the bidding of the new contracts at a time when the country is re-evaluating its position on natural resources in a process to draft a new constitution.

This week, a group of opposition members of the Lower House presented a request to stop the bidding process, accusing authorities of evading obligations to consult communities in a fragile desert ecosystem. A union of copper mining workers called the process untimely.

The upsurge in criticism underscores the enormous challenge of obtaining the social licenses necessary to increase the supply of metals such as nickel, cobalt and lithium in the transition from fossil fuels.

Chile, the largest lithium producer after Australia, has seen its market share decline in recent years, producing about 18,000 metric tons last year. The country offers five contracts to produce up to 80,000 tons each for 20 years.