The Latin American Lithium Rush: Who Will Control the Essential Resource for the Battery Age?

The future of electric vehicles is being negotiated somewhere between a Shanghai boardroom and the Atacama salt flats. Most people are unaware of it. They believe the supply chain behind everything has been figured out when they see the Teslas on the road, the wind turbines on the ridge, and the phone in their pocket. It hasn’t. Not at all. Large amounts of lithium, sometimes referred to as “white gold” by those who haven’t seen the actual extraction sites, are lying beneath a stretch of South American desert, and the question of who gets to extract, refine, and profit from it is still up for debate, contract by contract.

The figures are practically ridiculous. Over 65% of the world’s lithium reserves are found in Latin America. The energy sector’s demand for the material tripled between 2017 and 2022. Bolivia isn’t even among the top ten producers, despite having 21 million tons of the largest reserves in the world. There is a lesson to be learned from that gap: possessing a resource and reaping its benefits are two entirely distinct issues.

When it comes to attempting to determine the difference, Chile has been the most assertive. Following President Gabriel Boric’s announcement in April 2023 and the recommendations made by the Chilean Lithium Commission in 2016, the nation is heading toward what is effectively partial nationalization; new contracts now call for private miners to collaborate with a state organization, subject to production quotas. It’s a risky wager. Investors appear to think it could either scare away the very capital required to build refineries or anchor long-term value at home. Which is still unknown.

Argentina is doing almost the exact opposite. Foreign exchange controls, a 30-year tax stability guarantee, a fixed 3 percent royalty rate, and time-limited concessions are all available to foreign direct investment. There are currently 36 projects being investigated. There are currently two operational production sites. Extraction techniques that go beyond the sluggish, water-hungry brine evaporation ponds visible in satellite photos are being tested by a French-Chinese collaboration. The election of Javier Milei has shifted the political landscape away from Beijing and toward Washington, though the Chinese capital isn’t leaving. Seldom does it.

Bolivia comes next. They refer to it as the “Saudi Arabia of lithium,” which sounds impressive until you consider that Bolivia has been attempting to draw significant investment for fourteen years and is still far behind. Instead of just brine pits, Bolivian President Luis Arce wants battery factories. Large reserves, genuine political will, and the fact that the deals never quite close make it difficult to ignore the tension in that ambition.

Beneath all of this is a geopolitical arm wrestle that no one is bothering to hide any longer. The biggest battery cell manufacturer in the world, Contemporary Amperex Technology Limited of China, has been discreetly acquiring properties in Africa, Southeast Asia, and Latin America. Lithium Americas received $650 million from General Motors. In Texas, Tesla intends to build a refinery. Over half of the world’s lithium is still refined in China. Much of the urgency in Washington can be explained by that fact alone.

An Organization of Lithium Exporting Countries, or OPEC for batteries, has been proposed by some analysts. On paper, it sounds tidy. In reality, the three triangle nations are unable to reach a consensus on extraction philosophy, much less pricing. Alternative battery chemistries, such as sodium-ion, solid-state, or whatever comes next, could reduce the lithium premium before any cartel gains traction, posing a more subdued threat.

The ability of Latin America to export raw lithium is not the true test. It can, with ease. The more difficult question is whether Argentina, Chile, and Bolivia can follow Indonesia’s lead with nickel—banning raw exports, requiring domestic refining, and moving up the value chain—without frightening away the capital they still require. The kind of patience needed is hinted at in Chile’s 2006 copper sovereign wealth fund. Asians make up the top ten battery producers. They’re all not based in the Andes. Until that happens, the white gold will continue to flow eastward and northward, and the nations that are sitting on it will logically continue to question whether the rush ever truly belonged to them.