Could there be an ‘OPEC of lithium’? – by Ognjen Š. Miljanić (Green Biz – June 7, 2023)

Chile plans to nationalize its vast reserves of lithium, an element essential for development of batteries and electric vehicles. That could force new public-private partnerships for leading suppliers Albemarle and SQM.

Chile’s government in late April announced plans to nationalize its lithium industry. Such a policy could have worldwide repercussions on the battery and electric vehicle industries. Under the proposal, the world’s largest lithium-producing companies — U.S.-based Albemarle and Chinese-dominated SQM — will be allowed to continue their current contracts, but will be forced into public-private partnerships upon their expiration.

This move by Chile is not isolated. Last year, Mexico nationalized its lithium reserves, while Bolivia, which holds arguably the world’s largest unexplored reserves, called for a joint Latin American lithium exploitation policy. Considering that about 60 percent of the world’s reserves are in the “lithium triangle” — Argentina, Bolivia and Chile — there is talk of this becoming the “OPEC of lithium.”

Comparisons to OPEC, the Organization of Petroleum Exporting Countries, makes many fear that a similar de facto cartel may be emerging for the world’s battery market.

But there are big differences between the exploitation of oil and lithium.

1. Lithium reserves mostly exist in ‘free’ countries

With the exception of China, the world’s largest reserves of lithium are in functioning democracies; the world’s largest reserves of oil are not. Making an argument for nationalization in a democracy is easier than in absolute monarchies. In the latter, profits mostly benefit the narrow elite, while at least in principle, benefits of a nationalized resource are more equitably spread in a democratic society.

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