“China Feels Suspicious About Latin Americans’ OPEC-Style Lithium Supply Deal”


Analysts and watchers seem confident China would be concerned as Argentina, Bolivia and Chile plan to form an OPEC-style deal to determine production and price of lithium, which is used to make rechargeable batteries for phones laptops, laptops, cameras. , electric vehicles, pacemakers and toys.

Brazil’s widely read English daily, The Rio Times, in a recent article quoted the Argentine Foreign Ministry as saying that a document is being drafted to promote an OPEC (Organization of Petroleum Exporting Countries) of the “triangle of lithium” to coordinate the production of lithium and reach a common price agreement between Argentina, Bolivia and Chile, with the aim of stemming the unpredictable ups and downs in the prices of the product, whose global demand has experienced a sharp increase over the past two years.

These three Latin American countries collectively account for approximately 56% of the world’s identified lithium reserves. According to the US Geological Survey, Bolivia is home to 21 million tons of the 89 million tons that make up the world’s known lithium resources, while Argentina and Chile are responsible for about 32% of global production.

Most of the lithium mining in these Latin American countries is done by foreign or private miners, and there is little coordination between them at the political level or to influence any decision on production and pricing issues. . In order to eliminate ad hocism, streamline decision-making and ensure better coordination between the three countries on lithium production and pricing, they plan to establish an OPEC-like framework, said the Rio Times in its report.

Globally, China accounts for less than 6% of total lithium reserves, but it controls more than 60% of global lithium refining capacity, according to a study by Gavekal Dragonomics, a research firm that provides in-depth coverage of China. economics, politics and social issues. China is also the largest manufacturer of lithium-ion batteries. Beijing accounts for up to 80% of the world’s lithium-ion battery manufacturing. There are still fears that if Argentina, Bolivia and Chile form a cartel and set the price of lithium according to their wishes, China will find it difficult to maintain its monopoly on the pricing of the lithium market, especially since these Latin American countries plan to increase their production as well as develop their own lithium refining units.

This year, according to Reuters, lithium prices have risen by more than $70,000 a ton as major international automakers strive to shift production from fossil fuels to electric vehicles. Hyundai Motor Company in South Korea, Li Auto Inc and Great Wall Motor Company Limited in China, Newark and Rivian Automotive Inc in America, Ford Motor Company and BMW Group in Germany are among the major automakers that have started rolling out electric vehicles .

As the focus shifts to reducing greenhouse gas emissions across the world, renowned management consultancy McKinsey has predicted that the adoption of electric vehicles will gain 45% share globally from by 2030. Over the past two years, sales of electric vehicles have shown strong growth. . Until the first half of 2022, 4.3 million battery electric vehicles and plug-in hybrid electric vehicles have been delivered, which is 62% more than in the first half of 2021.

Given this upward trend in electric vehicle sales, analysts say lithium-producing countries are trying to increase production of the metal and make a profit by raising its prices, even as the rush to secure supplies in lithium triggered an increase of almost 500%. in the very demanding metal price over the past 12 months. The International Energy Agency predicted in its recent report a 40-fold increase in lithium demand by 2040. The increase in demand has encouraged Argentina, with only two mines currently in operation, to plan for more. 13 more in the years to come.

Argentina, which accounts for 21% of global reserves, plans, along with Chile and Bolivia, to use direct lithium mining (DLE) technology to maximize lithium mining and production. DLE technology, according to some analysts, uses an improved selective adsorbent to produce high-quality batteries from lithium-containing brines while protecting the environment.

During the CELAC (Community of Latin American and Caribbean States) summit in Buenos Aires held from October 24 to 26, discussions were held among member countries on lithium collaboration, a said Americas Quarterly, published from New York. However, among several analysts, there is unanimity that Latin American countries do not want to look the other way as lithium becomes a powerhouse of energy sources in a climate-hit world.

Argentina, which is a strong supporter of an OPEC-style deal among lithium-producing countries, is also pushing to make the region a hub in the lithium supply chain. If the United States and the European Union supported Latin American countries in their goals of becoming a major supplier of lithium batteries, there would be a day when China would lose its position as a dominant player in the supply chain. global lithium supply, some analysts say.

But for now, the world’s energy corridors are in turmoil with the Canadian government’s recent order to Chinese state-owned companies to divest from three critical Canadian mining companies involved in lithium mining, citing national security.

Valerio Fabri is a communication professional and a journalist/political analyst. He is a graduate of La Sapienza University, SSEES/UCL and SAIS/JHU.

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