In the global race for green transition technologies, Latin America is fed up with providing shoes to the sprinters. It wants to run its own race.
Countries such as Chile, Brazil and Argentina hold some of the world’s largest reserves of raw materials — including lithium, the “white gold” needed to power electric vehicle batteries. Currently, the resource-rich nations export lithium to China for processing and then buy finished products.
But as the EU eyes deeper collaboration with Latin America to satisfy its booming hunger for lithium, these countries are now making clear they will no longer accept extractive relationships.
“We don’t want to sell lithium to Europe … We want to sell lithium vehicles that run with lithium batteries,” Argentina’s undersecretary for Latin American and Caribbean affairs, Gustavo Martínez Pandiani, said on the sidelines of a summit between EU leaders and their Latin American counterparts this week.
“That will allow us to develop our own capabilities in terms of our own industries, our own companies exporting with added value,” he said. “That is the type of cooperation we want to develop.”
Countries across the region have recently moved to seize greater control of their national resources and supply chains: Bolivia earlier this year called for a joint Latin American lithium policy, while Chile announced plans to nationalize its industry.
Retaining the value generated through the extraction of raw materials and building value chains at home — by refining these materials domestically, as a first step — is now among the core demands of South American countries as they strike partnerships with the EU.
As part of the summit, Chile and the EU on Tuesday signed a new partnership to integrate “sustainable raw materials value chains, including through joint development of projects.”
“This was the first time that we had the opportunity to discuss in such clear terms a mechanism that would take us away from extractivism in Latin America,” Argentina’s President Alberto Fernández said after the summit.
Demand boom
The EU is banking on the “lithium triangle” spanning Argentina, Chile and Bolivia — which holds about half of the world’s identified reserves of the metal — to power its green transition at home. Currently, 78 percent of the bloc’s lithium comes from Chile.
However, experts say the region’s push for greater control of those resources is unlikely to negatively affect the bloc’s supply.
“There is not necessarily a conflict between Europe wanting to build up its own refining capacity, while supporting partner regions like Latin America in doing the same,” said Chris Heron, spokesperson of industry lobby Eurometaux, arguing that demand for the minerals is “so high that both will need to work together.”
The huge number of electric cars that are supposed to hit European roads in coming years, as sales of new combustion engine vehicles are banned from 2035, is causing demand for lithium-ion batteries to skyrocket. A study by Belgian university KU Leuven shows lithium demand will soar by 35 times by 2050.
Global lithium production has tripled since 2015 to reach 100,000 tons per year as of 2021, according to the International Energy Agency. That exponential grow is expected to continue and prices are also set to keep surging.
Experts also doubt that Latin American countries will rapidly build up their own battery production.
Michael Schmidt, a research associate at the German Mineral Resources Agency, said that while Argentina, Brazil or Mexico could be in a good position to do so, others — including Chile and Bolivia — would be likely to struggle initially.
Success depends “to a certain extent, on whether a country already has a car industry, whether it already has a local supply chain industry … and whether you have a domestic sales market or access to other markets,” he said.
The EU’s main focus, experts agree, should be to cooperate with the region to get lithium out of the ground and onto the market.
“Providing lithium is not a problem in theory, but it is a problem in practice,” said Maximilian Fichtner, a battery expert and director of the Helmholtz Institute Ulm. There are enough lithium reserves, but it is not yet available on the market as it takes around 10 years to turn a discovery into a producing mine, he said.
‘Partner of choice’
Brussels also understands it needs to ensure both sides benefit from raw material partnerships — something it is turning that into a core selling point to set itself apart from Beijing.
The EU wants to become “the partner of choice” for Latin American countries, said European Commission spokesperson Sonya Gospodinova, saying the goal is “to jointly develop a competitive, sustainable and responsible industry for extracting, processing, refining and recycling critical and strategic raw materials.”
Nicola Beer, a German Renew lawmaker leading Parliament’s work on the Critical Raw Materials Act — Brussels’ plan to diversify its supply of key materials — said that “further processing and recycling in Europe must go hand in hand with sustainable value creation in our partner countries, to the benefit of the local population and economy.”
That will do little to assuage the concerns of NGOs, which have criticized the EU’s approach to partnerships with the region for lacking social and environmental safeguards.
The EU’s Critical Raw Materials Act, said Alejandro Gonzalez, a human rights lawyer with the Centre for Research on Multinational Corporations, will “reinforce the neocolonial economic framework, in which material-rich countries are forced to play the role of those bringing resources to Global North countries.”
Sarah Anne Aarup and Camille Gijs contributed reporting.