SANTIAGO (Reuters) – As automakers race to a clean-energy future, Chile looked to be in the catbird seat. The South American nation possesses the world’s largest reserves of lithium, a lightweight metal crucial to manufacturing batteries for electric vehicles. Chile’s lithium is high quality and cheap to produce.
But the nation’s output has barely budged in recent years. Chile’s two lone producers, SQM and Albemarle Corp, have struggled to boost production to capitalize on strong global demand, which is widely expected to triple by 2025.
Chile’s government, meanwhile, has been slow to allow new players to enter the market. And indigenous groups and activists are opposing new projects, worried about environmental impacts. The upshot: Chile is losing ground to competitors.
Australia in 2017 surpassed Chile to become the world’s top lithium supplier. Neighboring Argentina is positioned to gain fast, with at least a dozen projects in the pipeline.
While Chile remains an important producer, the market is anxious and investors are looking elsewhere to boost supply, analysts said. Chile “is disappointing the industry” and if expansion projects there continue to stumble, it could cause “uncertainty and complexity in supply chains,” U.S.-based independent lithium industry consultant Joe Lowry said.
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