South America Wants an OPEC for Lithium. It Probably Won’t Work

                                By Ciara Nugent  Staff Writer newsletters.time.com

https://view.newsletters.time.com/?qs=1d67273347f8036a8af42f428f0a3...

Last week saw big news for lithium in Chile, the world’s second largest producer of the metal—an essential component of electric vehicle batteries. Leftist president Gabriel Boric announced a plan to bring the country’s existing lithium projects—currently operated by U.S. mining giant Albemarle and Chile’s SQM—under state control in the next few decades. Any future mines, meanwhile, will now be run as public-private partnerships with a new state lithium company, and utilize emerging, less environmentally damaging extraction technologies.

The semi-nationalization is the latest in a wave of similar moves to tighten states’ grips on lithium in Latin America, a region that holds 56% of the world’s identified lithium resources. Prior to the energy transition, lithium was a niche product mostly used to make ceramics and glass. But unprecedented global attention on the mineral is now pushing the region’s leftwing governments to demand a bigger slice of the lithium pie for their people. Bolivia, which holds 21% of global resources—the largest share of any country—has always kept its lithium under state control, and last year introduced extraction-technology restrictions similar to what to Chile is proposing now. Mexico, which holds 1.7% of resources, nationalized its industry in February (though has yet to set rules on tech). And though Argentina is an outlier, adopting a pro-business set of policies for the exploitation of its 20% share of the world's lithium, in recent months, it has joined officials from the other three countries in discussing a strategic regional alliance on the mineral—in the words of Bolivian president Luis Arce, “a kind of lithium OPEC.”

The comparison suggests these leaders hope to bring lithium down the same path that oil took in the 1950s to 1980s. It was in that period that, angered by multinational companies cutting prices for their product, oil-producing countries like Venezuela and Saudi Arabia gradually increased state involvement in their industries and launched the Organization of Petroleum Exporting Countries. The cartel today controls 40% of the global oil supply and colludes to manipulate prices by cutting or increasing production. A similar trajectory for lithium could, in theory, help Latin America boost prices. Countries could also try to pressure businesses to move more profitable parts of the lithium supply chain—such as processing and battery component manufacturing—to a region that today only exports the raw material. Chile’s Boric told his country that state control of lithium is the “best chance we have at transitioning to a sustainable and developed economy.”