LatAm in Focus: Can Latin America Power Up Its Lithium Prospects?

Demand for lithium is expected to keep growing exponentially, as it’s a critical component of how we power our smartphones, laptops, and electric vehicles. That could be a boon for Latin American economies, given that two-thirds of the world’s proven reserves of the metal development can be found in the lithium triangle countries—Argentina, Bolivia, and Chile—along with Peru.

But, of course, things aren’t always so simple. “Lithium is extremely exciting and interesting from a development standpoint,” explains Luna Lithium CEO Emily Hersh, who spent more than a decade in Argentina working in the sector. She noted that lithium’s extraction process is a scientifically challenging and capital-intensive process while “the whole process of exporting it, selling it in the supply chain is a tricky, tricky thing.”

Moreover, there’s the matter of how countries decide to regulate the sector. In Chile, the world’s second-largest producer of lithium, President-elect Gabriel Boric has pitched creating a national lithium firm. Countries that are not yet major lithium producers, such as Bolivia and Mexico, are also taking a statist approach. “A lot of political leaders learn very quickly that they can say, ‘I’m going to make a lithium cartel’” to make headlines and win political support, Hersh tells AS/COA Online’s Carin Zissis, explaining that even as demand grows, lithium is globally abundant. “If individual countries who today aren't major exporters of lithium chemicals decide that they want to put in place policies [that] don't advance lithium production in their country over time, that’s ok. The world can live without Mexico’s lithium.”

But firms also need to work with local and indigenous communities—a matter currently being taken up in the drafting of Chile’s new constitution. Hersh says that an “important cultural shift” is underway in which companies are doing a better job at addressing stakeholder concerns, but challenges remain in some C-suites. “If you don’t have…a high-level enough person who is an expert in, has spent time with, knows the names of, and understands what the needs of the community are, you probably will have a hard time with your community relations,” says the Payne Institute fellow.

Finally, there’s the question of Beijing versus Washington in the race for lithium and, on that count, Hersh says the latter is far behind; the United States is writing papers while “China is writing checks.”

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Luisa Leme produced this episode. The music in this podcast was performed at Americas Society in New York. Learn more about upcoming concerts at musicoftheamericas.org.