Latin America’s Lithium Leverage: Unlocking White Gold’s Potential

Strategic investment and policy coordination key to transforming vast reserves into sustainable growth and global energy transition leadership.
Latin America's Lithium Leverage: Unlocking White Gold's Potential
Tyler Lastovich

Latin America’s “Lithium Triangle,” comprising Chile, Argentina, and Bolivia, possesses over 65% of the world’s lithium reserves, a crucial component for the energy transition and combatting global warming.

As the demand for lithium, dubbed ‘white gold,’ skyrockets due to its essential role in producing lithium-ion batteries for renewable energy storage, these countries face the challenge of attracting and managing foreign investment to unlock the economic benefits of their lithium wealth.

Chile, as the world’s second-largest lithium producer, and Argentina are advancing in lithium production, while Bolivia, despite holding the largest reserves, trails in production due to strategic differences in resource extraction. Chile aims to further nationalize lithium production, requiring private firms to partner with the state, whereas Argentina has attracted foreign investment through favorable policies, including tax stability and a fixed royalty rate. Bolivia, known as the ‘Saudi Arabia of lithium,’ strives to establish battery production facilities but lags in attracting investment.

The competition for lithium exploitation unfolds amidst geopolitical tensions, particularly between the United States and China, with the latter refining over half of the world’s lithium. The advanced technological capabilities and investments from rich states and multinational corporations emphasize the need for Latin American countries to avoid the ‘resource curse’ by carefully managing their resources and international partnerships.

Proposals for an Organization of Lithium Exporting Countries to stabilize prices and coordinate responses among the Lithium Triangle countries face challenges due to divergent resource management practices. Instead, Latin America should focus on coordinating resource governance with industrial policy to foster non-extractive sectors, learning from Global South countries like Indonesia, which has benefited from banning raw nickel exports and expanding downstream industries.

To truly capitalize on the lithium boom, Latin America must not only attract investment in mining but also in refining and battery production, ensuring local employment and technological transfer. This multifaceted approach will be crucial for the region to achieve sustainable growth and play a significant role in the global energy transition.

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