SANTIAGO, Chile – The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has released a special report on the opportunities and challenges posed by the extraction of lithium in the region.
Lithium is one of the key elements in the energy transition and has been deemed a strategic resource by those countries in the region that have abundant deposits.
Consequently, the ECLAC stresses the importance of creating a productive development agenda centered on lithium to promote its extraction for use in economic activities directly and indirectly related to the mineral.
In the publication, titled Lithium extraction and industrialization: Opportunities and challenges for Latin America and the Caribbean”, ECLAC examines the role of the region’s lithium-producing countries in the global value chain of lithium-ion batteries as well as the governance, regulatory and fiscal regimes that determine how the exploitation of that mineral functions in the “lithium triangle” countries.
The report, which was presented by ECLAC’s executive secretary, José Manuel Salazar-Xirinachs, concludes with public policy guidelines that can contribute to a productive development agenda centered on lithium, as well as to the industrialization of this mineral and others in clean technologies for the energy transition and electromobility.
“From the perspective of governments, this requires policies and regulations that are conducive to the creation of public goods, the development of soft and hard capacities and infrastructures, and the mobilization and steering of the necessary resources,” the report noted.
According to ECLAC, up to now, lithium has been an irreplaceable input for the production of lithium-ion batteries, a key technology for decarbonizing transportation and storing energy generated from renewable sources.
Therefore, it can contribute to countries’ economic development via a positive impact based on new value creation, in the form of increased output, exports, employment and tax revenue.
In the region, the resource is considered to be strategic due to its potential for promoting socio-economic development, value-added and productive linkages that would contribute to a process of structural change in economies.
The report indicates that the identified lithium resources in Latin America and the Caribbean are concentrated in the so-called lithium triangle. In addition. Furthermore, the region is home to 52 percent of global lithium reserves.
The report adds that the fight against climate change, in pursuing the transition to renewable energy and electromobility, is the main engine driving the surge in current and future lithium demand, which could grow 42 times over by 2040, according to the International Energy Agency.
Lithium prices rose nearly ninefold between 2021 and 2022, the document indicates. Geopolitical actors such as China, the United States and the European Union lead electromobility efforts and have a series of policies aimed at ensuring the supply of minerals deemed to be critical for the energy transition.
ECLAC warns the most immediate possibilities for the region are those arising from lithium extraction and refining: export growth, job creation, increased tax revenue and the forging of upstream productive links.
It said increased participation by the region in downstream segments of cell and lithium-ion battery production is intimately related to the development of a large-scale electric vehicle industry, which would require high levels of financing, access to other minerals deemed to be critical, and human and technological skills.
“Separately, lithium extraction poses socioenvironmental challenges, stemming mainly from water consumption in the extractive processes in areas with high water stress, the impact on biodiversity and on the traditional economic activities of social groups living near the salt flats.
”To address this, the lithium industry will need stricter regulations and standards to ensure the activity’s sustainability, the report notes.
