{"id":3485,"date":"2023-02-28T12:32:39","date_gmt":"2023-02-28T11:32:39","guid":{"rendered":"https:\/\/a2kadvisory.com\/?p=3485"},"modified":"2023-03-02T07:19:48","modified_gmt":"2023-03-02T06:19:48","slug":"who-will-win-the-lithium-race","status":"publish","type":"post","link":"https:\/\/a2kadvisory.com\/fr\/2023\/02\/28\/who-will-win-the-lithium-race\/","title":{"rendered":"Who will win the lithium race?"},"content":{"rendered":"
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\u2018White gold\u2019 could remake the geopolitical landscape \u2013 with winners and losers on either side<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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We hear a lot of the technological dangers to our planet \u2013 oil, gas, coal, concrete, plastics, the list goes on \u2013 but what of the technological solutions? Lithium, an unremarkable silvery grey in appearance and a harsh metallic to the taste, is a part of that conversation. In fact, if we assume that the biggest technological bottle-neck for the all-electric transition is batteries, you could say it\u2019s the most important part of it.<\/p>

But, as with any precious resource, there are winners and losers. And lithium is so precious in fact that it may just remake the geopolitical landscape \u2013 or at least tilt it towards a South American trio (and China).<\/p>

A \u2018new type of petroleum\u2019<\/strong>
Lithium batteries \u2013 as opposed to their low-density lead acid counterparts \u2013 are the future. Their commercial debut didn\u2019t come until Sony\u2019s CCD-TR1 camcorder in the early 1990s, but now they\u2019re the de facto choice for electric toothbrushes, mobile phones, even your country\u2019s military drones.<\/p>

In a report last year, the World Bank found that the production of key minerals, including lithium, would need to rise by nearly 500 percent by 2050 to meet the growing demand for critical clean energy technologies. The organisation\u2019s Global Director of Energy and Extractive Industries, Riccardo Puliti, was clear, \u201cambitious climate action will bring significant demand for minerals.\u201d<\/p>

Elon Musk himself has called them a \u201cnew type of petroleum.\u201d And he would know. The battery of a Tesla Model S uses around 12kg of lithium. Without it, electric vehicles will not account for 60 percent of new car sales by 2030, as he hopes and many others predict. So naturally, demand is high\u00a0(see Fig 1)<\/em>.<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Overall demand for Lithium-ion batteries has exploded from just 0.5 gigawatt-hours in 2010 to around 526 gigawatt hours a decade later. Experts expect it to increase 17-fold come 2030. For just the US alone to go all-electric by 2030, production capacity must grow 200\u2013300 percent. The upward curve in demand is mirrored \u2013 perhaps even more dramatically \u2013 by its price. In 2021, it was up almost 500 percent on the year. Who then is profiting from lithium?<\/p>

China rising<\/strong>
To you or me, Tesla is the undisputed poster child of the all-electric transition. It may surprise you to hear then that Chinese companies \u2013 and not American behemoths buoyed by the spirit of free enterprise \u2013 have made by far the most progress.<\/p>

Just five companies are responsible for around three-quarters of global lithium production. They operate at every stage of the production line, from resource development, refining and processing, to battery manufacturing and recycling. In fact, of the 200 battery mega-factories in the pipeline up until 2030, 148 will be in China.<\/p>

This is no accident. The administration decided at the turn of the millennium, long before almost any other nation, to aggressively pursue the production of electric vehicles and the associated supply chain. The strategy has paid off.<\/p>

The IEA puts China\u2019s share of global lithium chemical production at 60 percent. It\u2019s an especially impressive feat once you consider that it\u2019s home to only 25 percent of the world\u2019s lithium reserves.<\/p>

The rest of the world are years, if not decades, away from catching up. That said, the importance of metals like lithium, and to a lesser extent graphite and cobalt, is not lost on governments around the world.<\/p>

\u201cGovernments have realised that there\u2019s going to be a new regime with respect to energy generation and usage, and that is clearly going to revolve around a new class of metals,\u201d said Chris Berry of House Mountain Partners, speaking on a panel at this year\u2019s Fastmarkets Lithium Supply and Raw Materials conference. \u201cI think what governments are realising is the idea that these metals, lithium in particular, are really going to underpin the next generation of how energy is generated.\u201d Not just how, but where.<\/p>

Whereas petropolitics have long placed the Middle East and the western world, particularly the US, at the centre of its supply-demand dynamics, the current structure of the lithium industry places South America at its heart, with China out in front.<\/p>

New opportunities, old problems<\/strong>
South America holds around 75 percent of the world\u2019s known reserves, with Argentina, Chile and Bolivia representing the so-called \u2018lithium triangle\u2019 of producers. The big three of Argentina, Chile and Bolivia have already discussed the possibility of creating their own OPEC for lithium, a discussion they\u2019re expected to pick up in earnest as the race for raw materials heats up. Though ramping up lithium production is far harder than it sounds.<\/p>

In Bolivia we\u2019re seeing a revival in resource nationalism. In Chile there are calls to create a state-run lithium mining company. And in Argentina the government has taken a liberal approach with little state involvement, little red tape and low taxes. In Mexico, meanwhile, the government is all too aware of its lithium reserves and this year banned private miners from developing them altogether. The lithium triangle does enjoy certain advantages over the rest of the world.<\/p>

Namely, that it\u2019s the world\u2019s cheapest source of lithium carbonate to date. Add to that the fact that brine extraction is arguably more sustainable than hard-rock extraction in that it uses fewer harmful chemicals and less energy.<\/p>

Advantages notwithstanding, a slick, functioning system, the likes of which we\u2019ve seen in China, are a long way off. It\u2019s far from clear that any member of the lithium triangle will be able to quickly ramp up production to ease supply shortages \u2013 or that their governments will reap windfall revenues while the high prices last. As it stands, there is no one single approach to lithium production taken by the three. Nor will they be for as long as they\u2019re so divided on politics.<\/p>

Even with these difficulties, we can say that the rise of electric vehicles and the rocketing demand for lithium-ion batteries has given rise to a distinctly non-Western global power structure. Sure, lithium is only one factor in a web of overlapping and\/or competing dynamics. Though it\u2019s clear the above countries will profit.<\/p>

As Puliti puts it, \u201cthese countries stand to benefit from the rise in demand for minerals but also need to manage the material and climate footprints associated with increased mining activities.\u201d Because, as with oil and gas extraction, abundant resources can be a blessing. They can also be a curse.<\/p>

A resource curse?<\/strong>
The concentration of resources does mean that any localised physical or political turmoil will disproportionately impact the global availability of minerals, and in turn prices. But the environmental implications \u2013 and those for people living locally \u2013 hint at the harmful effects global demand could inflict on ordinary people. According to the IEA, \u201cmore than half of today\u2019s lithium production is in areas with high water stress. Several major producing regions such as Australia, China and Africa are also subject to extreme heat or flooding, which pose greater challenges in ensuring reliable and sustainable supplies.\u201d<\/p>

This matters, because lithium extraction, and particularly the method most commonly used in the lithium triangle, requires masses of water. Bolivia\u2019s San Crist\u00f3bal mine reportedly uses 50,000 litres of water a day, and lithium mining companies in Chile have been accused of depleting vital water supplies. Worse still, lack of reliable reporting on the issue means that the actual amount of water used is proving difficult to track.<\/p>

One report by the non-profit BePe (Bienaventuradors de Pobres) also identifies water as a big concern for lithium mining operations. It claims that not enough research has been done on the potential contamination of water and \u201cactivity must be stopped until studies are available to reliably determine the magnitude of the damage.\u201d Another report by Friends of the Earth says, \u201cas demand for lithium rises, the mining impacts are increasingly affecting communities where this harmful extraction takes place, jeopardising their access to water.\u201d<\/p>

What we have here is a situation familiar to many countries competing in the energy market. One where, on the one hand, rocketing demand has supply-rich countries staring down a potential fortune. Though it\u2019s also one where overenthusiastic production could threaten people living in those same countries, be it through pollution, environmental destruction or displacement.<\/p>

The outlook for lithium production then is\u2026complicated. Healthy demand and high prices bode well for a trio of countries that haven\u2019t held much influence in global energy decisions. Clearly, China is leading on production in 2022, but who will control the future? And perhaps more importantly, at what cost?<\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Source : worldfinance.com<\/a><\/p><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"

We hear a lot of the technological dangers to our planet \u2013 oil, gas, coal, concrete, plastics, the list goes on \u2013 but what of the technological solutions? Lithium, an unremarkable silvery grey in appearance and a harsh metallic to the taste, is a part of that conversation. In fact, if we assume that the biggest technological bottle-neck for the all-electric transition is batteries, you could say it\u2019s the most important part of it.<\/p>","protected":false},"author":1,"featured_media":3493,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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Who will win the lithium race?<\/a><\/blockquote>