Bolivia and Chile are now the undisputed sultans of the lithium salars, and Argentina comes in a close third, all boasting 48% of the world’s lithium reserves combined. While this may be news to some, it isn’t to corporations such as Mitsubishi and Potash Corp. of Japan and Saskatchewan, Canada, respectively.
As alternative energy is used for our hybrid cars and soon-to-be fully electric cars, Bolivia, Chile, and Argentina are stealing the spotlight with 48% of the world’s lithium reserves located in the salars (salt lakes) of these three South American countries. Now that lithium becomes more important for fueling our energy addiction, competition for the salars and opportunity for lithium extraction will gain momentum among the world’s multinationals. As oil gives way to lithium and other alternative energy sources, our world view on important emerging economies will inevitably shift.
Mitsubishi has been in negotiations with Bolivia since 2009 regarding large-scale pure electric car programs. Other corporations such as LG (Korea) and Bollore (France) are also staking claims in Bolivia. Potash Corp. owns roughly 32% of shares in Chile’s SQM (Sociedad Quimica y Minera de Chile S.A.). Recently, it has been forecasted that Argentina will become the hotspot for lithium mining, as Bolivia and Chile become more crowded in (recent reports estimate some 4.9 million tons of lithium in Argentina). As of 2010, Mitsubishi announced it too plans to invest in an Argentinean lithium mine (Cauchari Olaroz salar in the northwest).
According to the International Lithium Alliance, Chile leads with 39% of South America’s lithium (7,520 killi tones), followed by Argentina with 32% and Bolivia with 28%.
In the world of Lithium, it seems China isn’t the leader. All the same, of the companies already in South America staking claims on the salars, Japan, China, and South Korea are in the lead. Lithium is used in virtually every electronic device these days (anything from iPods and watch batteries, to Hybrids and the new pure electric cars, or EVs), and getting a spot on the salars is vital to future growth projections of any automotive or electronic industry.
Not everyone, though, is thrilled about multinationals moving to South America. Bolivia in particular, has been adamant about not allowing international corporations access to their salars to exploit and potentially damage national resources irretrievably. President Evo Morales is determined to uphold the rights of Bolivia’s indigenous people and in 2010 announced that the lithium mines would be ‘State run’. However, Bolivia has expressed interest in allowing Japanese electric car production, if the cars are produced in Bolivia. While Bolivia’s demands may be high for the moment, some compromise will be needed over the next few years, if they are to compete successfully with Argentina and Chile. As Bolivia tightens opportunities, investors will look elsewhere.
Kowa, a Japanese company, and Potash Corp. of Saskatchewan, Canada use lithium reserves in Chile. With the Obama administration’s announcement to establish a U.S. based lithium industry, it is only a question of time before American companies shift to South America. AMEX, a smaller alternative to NYSE, has focused on alternative energies and holds a share on Argentina’s lithium. Already the U.S. Lithium Exploration Group owns 60% of five mining concessions in the Salta province in northwestern Argentina (Salar de Rio Grande and Salar de Arizaro). While Chile and Bolivia have been leaders in lithium production so far, Argentina’s reserves have remained relatively unexplored. But it won’t stay that way for long, as Japan, China, and Korea continue to develop their prospects and more companies from North America and Europe develop their own lithium based industries.
The list of companies and organizations already in South America (Bolivia, Chile, and Argentina combined) includes Mitsubishi, Toyota, Potash Corp., Kowa and Australia’s Admiralty Resource, a mining company with its main project focused on Chile’s lithium resources. If lithium is truly the new oil, and these three South American countries see themselves as the new “Saudi Arabia”, it won’t be long before there is a new global organization centered on the protection and exploitation of lithium. As more competition arises in the region, unifying policies and regulations will be established. While OPEC became the dominant political organization controlling the flow of oil over the last half century, the West may soon be forced to contend with a Latin American political equivalent formed by the lithium rich countries.