Emma Bagnulo
For those who are unfamiliar with the complex world of raw materials and technology, this article’s title might sound a bit confusing.
Lithium is a silvery metal found in some celestial bodies, such as brown dwarfs, and - luckily for us - also here on Earth, though with some complications. Being highly reactive, lithium does not occur in its elemental form, but rather is contained in sea water and some mineral formations. Latin America is rich in lithium reserves, though also Australia, China, and the Democratic Republic of Congo are worth mentioning as producers.
But why is this relevant?
Lithium is one of the main components of modern batteries, so those used in electric vehicles and mobile devices. It also has a relevant military use, particularly when it comes to nuclear power, and is present in certain psychiatric medicines. The demand for lithium is currently high, and according to the International Energy Agency it will have a 90% increase by 2040.
It is easy to understand why for those countries that do not produce it, lithium becomes a resource that must be obtained at all costs. On the other hand, countries that are rich in lithium are becoming more and more aware of their growing importance as exporters of the material and are wanting to use it strategically.
The President of Chile, Gabriel Boric, has recently been talking about semi-nationalizing the production of lithium, by proposing a kind of public-private partnership. It would not be the first time that lithium production is nationalized: Bolivia did the same in the ’90s. However, this move from La Paz also created some inefficiencies in the extraction process. In 2022, Mexico also took the nationalization route, violating some pacts with private investors.
Nevertheless, Bolivian president Luis Arce recently said that there would be benefits in an alliance between Argentina, Chile, Bolivia and possibly Brazil, Mexico, and Peru, to control lithium’s prices. Such a decision would contribute to the finances of these States and the development of their economies, just like the Organization of the Petroleum Exporting Countries (OPEC) did for oil-rich countries in 1960.
Still, there are some technical issues with this plan. Lithium extraction comes at a high environmental - and economical - cost. For example, in Chile, the metal is obtained by evaporation of huge masses of water from underground lakes. This results in soil degradation, loss of biodiversity, air contamination, and water shortages. Lithium is also non-renewable, its extraction is polluting, and yet it is necessary for renewable energy solutions. Moreover, researchers are already working on ways to substitute toxic metals in batteries, since lithium resources are also limited and finite.
When it comes to obtaining lithium, just like other rare elements, the EU is fully dependent on imports from Chile, the U.S., Australia, and Russia. This creates supply vulnerability, as geopolitical tensions or changes in export policies may come into the picture. Moreover, it makes it complex to achieve technological autonomy, setting Europe back in the development of clean energy technologies.
The environmental hazard of lithium extraction also poses a contradiction between the EU’s needs for the metal and its climate pledge. As previously mentioned, lithium is one of the main components for electric vehicles. Refraining from its extraction means being unable to produce batteries for new, eco-friendly cars. At the same time, the process of extraction is itself a pollutant factor. This could possibly be reduced if the EU was able to extract lithium in a responsible manner in its regions. The EU is investing in research and development to improve lithium extraction technologies and promote recycling and reuse of lithium-ion batteries, thereby reducing the need for new extraction. Projects such as Horizon Europe support research activities in this field among others.
There are many effects a lithium OPEC may have on the EU. A stricter cooperation in South America regarding lithium may be an obstacle for the European Union, as it may mean an increase in prices, and it could set back green policy goals. Nonetheless, it is important not to overlook the possibilities it may offer.
The EU could invest in technological development cooperation in the area, fostering sustainable mining practices in exchange for supply stability. Yet, there has to be more emphasis also on looking into alternatives to lithium that align more with the EU social and environmental standards. Once again, diversification of resources and suppliers looks like the solution to avoid vulnerability in an international system in which power dynamics and alliances appear to be changing rather quickly.
Image: Minining.com
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