energy insights

Lithium Triangle Eyes Bigger Stake in EV Game

As the drive for lithium supplies speeds up, Argentina, Bolivia, and Chile find themselves in the spotlight. They are the center of attention and the apple of every eye, from China and South Korea to Canada, Europe, and the United States. The future has arrived at their doorstep, and the world is watching to see who will enter.

The three countries comprise what has become known as the “Lithium Triangle,” where half the world’s lithium deposits rest in the high-altitude Andean plains of South America. Throw in lithium-producing upstarts Mexico and Brazil, and there is a potential consortium of global leverage not seen since the Organization of the Petroleum Exporting Countries (OPEC) formed in 1960.

Lithium is now among the hottest minerals on the planet due to its widespread use in electric vehicle (EV) batteries. As millions of lithium battery-powered vehicles hit the roads worldwide, the Lithium Triangle has become a magnet for battery producers seeking massive lithium supplies to sustain long-term demand. That’s a lot to consider for countries known more for their agriculture, food processing and manufacturing industries.

In Chile, the sudden demand for lithium has prompted calls to nationalize the resource, and that sentiment is spreading. According to Reuters, Chile unveiled plans for a state-led, public-private nationalization model that is so disruptive that investors are ringing the alarms this spring. Meanwhile, Bolivia already maintains strict control over its lithium bounty, and Mexico is sorting out how it will manage the country’s lithium resources its president nationalized last year.

Negotiators from Argentina, Bolivia, and Chile have sought a collaborative arrangement that would resemble OPEC and create market leverage for domestic battery manufacturing and higher prices. However, local government squabbles in Argentina doused hope for an immediate agreement, sending representatives back to the drawing board.

The nationalization of Chilean lithium and ongoing efforts to form a lithium cartel is already beginning to spook producers and investors who favor long-term reliability. The U.S. EV industry is also concerned about the implications of this move.

As political tensions with China mount and concerns over that country’s lithium battery dominance persist, the last thing the U.S. needs is another bully with leverage, which may be on the horizon if the Latin American players can reach an accord. If that happens, the biggest loser will be the American consumer.

While America needs lithium mines to compete with China’s dominance and protect against monopolistic governments, the expansion of U.S. lithium mining faces stubborn opposition. The Institute for Energy Research states that protests and lawsuits have locked up enormous U.S. lithium reserves for years.

Despite the United States having more than 3% of the world’s reserves (10% of unproved resources; USGS), it still only has one active lithium mine, producing less than 2% of the annual supply. Meanwhile, U.S. demand for lithium batteries continues to skyrocket, with more than 760,000 electric vehicles sold in 2022, accounting for nearly 10% of the global market.

The U.S. lithium supply chain must improve to meet current needs and ensure the long-term sustainability of a clean energy transition that is gaining momentum. Without a substantial supply of domestically produced EV batteries made with U.S. lithium, our industry could turn flaccid, leaving consumers stranded on the roadside.