The state of lithium
by brooklynbadboy
Sun Jun 13, 2010 at 08:02:03 AM PDT
As the United States turns its attention to new sources of energy, one of the most obscure minor metals in the world is becoming a household name. Demand for lithium, specifically lithium carbonate, has increased substantially in the last ten years. According to the U.S. Geological Survey, the United States imports 3,450 metric tons of lithium carbonate while producing about 1,500 tons annually. Approximately 80% of the world's lithium is located in the great salt flats of Argentina, Bolivia, and Chile. As with any valuable commodity, lithium is becoming another focus of competition in national and world politics.
(While Lithium (Li) and Lithium carbonate (Li2CO3) are very different materials, for the purposes of this article lithium carbonate shall be called lithium.)
Almost all the the innovations in battery technology today use lithium. Lithium is not an obscure, precious commodity. It has applications in ceramics, pharmaceuticals, and in aluminum production. The rapid rise in demand for it, however, is due to its increasing usefulness in lithium-ion batteries. Lithium-ion batteries are desirable because they are lightweight, have a very slow loss of charge when not in use, and have double the energy density of nickel-based batteries. Lithium is commonly found in rock salts around the world. The United States has one domestic major lithium company, American Lithium Minerals of Nevada, exploring throughout the Great Basin. The company has no mines producing at the moment. USGS reports a total 760,000 tons in proven U.S. reserves. There are 13 million tons in other countries, with the Chile and Bolivia holding 3 million and 5.4 million tons, respectively. There are many more details about lithium production I wont address here, but will in future work. Lithium mining, like all mining, has an environmental price. There are alternatives to lithium in development that may render it obsolete. For now, I want to examine the political dimension of lithium production in Chile and Bolivia and its impact on the United States.
Chile
Any talk about lithium has to begin with Chile. Chile exports 50 percent of the world's lithium, mostly through a formerly state-owned company called SQM. The company mines lithium at the huge Atacama Salt Flat, tapping an estimated 2.5 million metric tons in lithium reserves. Julio Ponce Lerou is the son-in-law of the brutal military dictator, Augusto Pinochet, and is the man in control of formerly state-owned SQM. He is one of the richest men in Chile. Larou's control of Chilean lithium is a classic story of corruption common wherever privatization schemes have unfolded. There are other unexplored salt flats throughout Chile, almost all owned by the state. RareMetalBlog notes that under a new "open markets" initiative, the government of the new center-right president, billionaire Sebastian Pinera, has passed measures that will open up new lithium mines to more private interests. Chilean bloggers are already calling Pinera their George W. Bush--complete with "ownership society" rhetoric.
Bolivia
Bolivia made big news when it announced 5.4 million tons of proven lithium reserves in its vast Uyuni Salt Flats. But the government of socialist president Evo Morales has made clear it does not intend to do business like Chile:
In Bolivia, where President Evo Morales has called lithium the "hope of humanity," as well as the key to Bolivia’s future economic prosperity, the government is taking a different approach. According to Bolivia’s new constitution, the country’s natural resources belong to the Bolivian people and must be administered in their collective interest by the state. Instead of exporting raw lithium, the government wants it to be processed, refined, and industrialized, with battery plants and even car factories, on Bolivian soil. The goal is to capture the value added by industrialization for Bolivians, in the form of jobs and economic and social benefits, instead of simply enriching transnational corporations.
Unfortunately, Bolivia does not have the money to mine, refine and add value to lithium this way. Morales has stated that he is actively seeking private investment, but that Bolivia wants "partners, not bosses." This approach has scared away foreign investment, compounded by Morales' closeness to Venezuelan President and U.S. antagonist Hugo Chavez. There are also significant infrastructure problems. The Uyuni flats are remote and inaccessible by road and train, whereas the Atacama flats are very easy to reach. Bolivia has established a state-owned lithium company, and even has met local resistance. The local folk of Uyuni insist on sharing the benefits of mining. Bolivian leaders believe that increasing global demand for lithium will help trump these challenges and will allow the country to become the dominant producer.
President Obama has made automobile battery innovation a centerpiece of his agenda to remake the American economy. Since taking office, his administration has invested heavily in domestic battery production and research and development. The President has announced a goal of putting 1 million battery-powered vehicles on the road by 2015. If that goal is met, the vast majority of these vehicles are expected to use lithium-ion batteries. While the Prius uses a nickel-based battery, Toyota is testinglithium-based batteries. General Motors' new Chevy Volt will use a lithium-based battery. The competition for the design and manufacture of these automobile batteries is the central item driving the optimism among lithium producers. As of today, there is only one domestic lithium mine producing. That mine, in Silver Peak, NV, received a $28.4 million Recovery Act grant for expansion. The mine and a refinement facility in North Carolina are both owned by German chemical conglomerate Chemetall.
Despite domestic production, the United States and China are likely to be the major global importers of lithium carbonate. Increased domestic production of lithium-ion batteries for automobiles will drive the demand in America. Consumer electronics and appliances will drive demand in China. China is also stepping up its domestic mining and refining of lithium believing it to be the "oil" of the 21st Century. China's domestic reserves are also limited, with only 540,000 tons. Both nations have their eyes on Bolivia, but the State Department says bilateral relations have "deteriorated sharply." The U.S. has taken a hardline position against the Morales government over coca production. Morales expelled the DEA from the country after taking power. President Obama talked of a "fresh start" when he met with Morales, but so far his administration has taken a decidedly hostile stance. Meanwhile, China continues improving warm relations with Bolivia, recently signing new trade aggrements. China is looking for Bolivian immigrants while the U.S. is cracking down on immigration. These developments are likely to impact international politics as nations scramble to secure alternatives to oil production. The global competition for resources continues unabated, whether it's petroleum or lithium at stake.
Should lithium become as important a strategic resource for the United States as oil currently is, the domestic political environment in nations like Bolivia, Chile and Argentina will become increasingly important to America. Should Bolivia become successful in its development, that nation's insistence on being more than a simple supplier of materials will strain relations between other entities or nations seeking a share of the country's riches. Nearby states like Chile and Argentina could be influenced by the people's movement in Bolivia and their insistence on enjoying the fruits of the natural resources. How these things play out should be of great interest to the labor, environmental, and business groups in the United States. By insisting on a clean energy transportation system, there will inevitably be unpredictable consequences, both domestic and international. It could be that humanity is on the cusp of the very same global competition for lithium that defined oil exploration and production in the 20th century.
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