Here we present the first contribution in a series of articles that we will publish on common goods, capitalist extraction and dependence in the Global South, with a special focus on Latin America.
A few days ago the discussion about Bolivia and the overthrow of Evo Morales circulated in the media once again. Rivers of ink flowed over the link between the coup and lithium, the necessary metal for the revolution of rechargeable lithium-ion batteries (LIB) used in smartphones, energy storage, power tools, electric bikes, medical equipment, smartphones and electric vehicles (EVs) among others. It was suggested that there were hidden interests at play; certain objectives and actors were identified. The spark was ignited via Twitter: Elon Musk himself, Tesla’s CEO, linked himself to that historical tradition of 20th and 21st century imperialism, that of interference in different Latin-American countries. “We will coup whoever we want! Deal with it” he arrogantly stated. A few days later he deleted the tweet adding that Tesla obtains lithium from Australian deposits.
This discourse is essentially about the nature of lithium as a strategic resource, a good deal for mining companies and a large source of income for sovereign states as royalties and a reason for intervention in productive processes, creating value by industrialization and the tech market. In this regard, Bolivia had been pursuing a strategic policy since 2008, which was cut short by the coup and the Añez dictatorship. Progress was being made in research and development of state-owned lithium carbonate production plants. The government also developed and produced cathodic materials and LIB, which were being used in the local networks (rural communities) and were expected to be exported to Europe. In October 2019, Morales officially presented an electric car produced by a state owned company. Bolivia has the largest lithium deposits in the world. Thus, capital, corporations and other countries interested in this metal all had an interest in some way or another in the overthrow of Morales, seeking to take control of the lithium or to prevent the rise of a new sovereign power, which could positively impact in other countries in the region, allowing China to gain even more advantageous positions in the lithium market on a global scale. This is also an important phase of the ongoing trade war between the US and China.
The metal, converted into lithium carbonate or lithium hydroxide, is essential for LIB. At the moment, it is irreplaceable; it is an abundant and accessible raw material. New batteries will be developed in which lithium will be essential. In one way or another, lithium is at the heart of global energy conversion – a huge business that won´t stop growing – catalyzed through the automotive industry.
What is that system like? What about energy reconversion, EVs, conservation of renewable energies and new batteries? Who are the actors involved in that process? What is the role of Latin American countries, especially Argentina, Bolivia and Chile, where more than 80% of the world’s lithium reserves are located? Musk’s tweet offers us a starting point, an event that aligns the gaze and sheds light on the situation of the sub-continent, which when talking about capitalist extraction showcases the persistence of dependent relationships in the midst of a capitalist general crisis, particularly climatic and natural. We will try here to provide some elements for the debate that is already under way.
Geopolitics of lithium
We´ll start by providing and retrieving diverse elements for what some authors suggest should be called the “geopolitics of lithium” (Formillo 2017). Lithium is an essential metal when it comes to replacing the internal combustion engine with electric propulsion. It´s a main raw material for the energy accumulators that power everyday electrical devices, which are everywhere and use all the time. It is a new accumulation technology that will allow renewable energies to expand and consolidate. More than half of the lithium goes to battery production, 23% is used in glass and ceramics, while 6% goes to lubricating greases. It is also used in aerospace industry, aluminum, air conditioning systems, and pharmaceuticals.
The number of academic papers discussing lithium in the US, Europe, China and other Asian countries have exploded since 2010. The Nobel Prize in Chemistry 2019 went for the LIB. Global carbonate lithium consumption in 2019, the product from which lithium hydroxide is made, is estimated at 307,000 tons. Demand by 2025 is expected to be 800,000 tons a year.(1)
EVs: electric vehicles
EVs and renewable energies are emerging as the leading replacement for combustion engines. In 2019, 2.1 million EVs were purchased (2.6% of global car sales); sustained, inexorable growth is expected. The International Energy Agency (IEA) puts the global EV fleet at over five million by the end of 2020, and predicts that in a best-case scenario, sales could hit 43 million vehicles per year by 2030 taking the total fleet to 250 million.(2) By 2040, almost 60% of all new vehicles sales and a third of cars on the road will be electric, according to BloombergNEF.(3) Morgan Stanley predicts that 1 billion EVs could be on the road worldwide by 2050.(4)
Today’s leading EV manufacturers are Tesla (US), Byd and Baid (both China). Tesla led sales in 2019, and has become the most valuable automotive company in the world, surpassing the market value of GM and Ford combined. In the first quarter of 2020, Tesla produced 103,000 EVs, leading global sales during pandemic. One way or another, all automakers will be moving towards EVs very soon.
Tesla’s experience set the tone for this process. The company went from a single large factory in California (Gigafactory1) to operating three of the world’s largest new generation factories (Nevada and Shanghai). They will soon have another two mega-facilities, starting operations at Gigafactory4 (Berlin) in 2021, with a $4.4 billion project, and Gigafactory5 (Texas) where the electric semi truck, (Tesla Semi), and the Cybertruck will be produced. Gigafactory3 (Shanghai) began construction in December 2018 and a year later has already produced 150,000 cars. Gigafactory1 (Nevada) produces battery cells and powertrains of the all-electric sedan, and cost $4.5 billion.
The Tesla Model S weights 4,941 lbs. Its battery pack weighs approximately 1,200 pounds.
Batteries are the most important and expensive component of EVs. They can accumulate electrical energy and are rechargeable. They gain in efficiency year by year and will be used in households very soon. Let’s take a look at some of the major producers.
LG Chem (South Korea) makes batteries for Tesla, Volkswagen, Mercedes-Benz, Audi and Volvo, accounts for a quarter of the global market and has five megafactories on three different continents. Another giant is CATL (Contemporary Amperex Technology, China). It has a huge production center being built in China, and is also a supplier for Tesla. The company has reported that it plans to invest $2 billion in research and battery production in Europe over the next years, reaching Tesla’s Gigafactory1 production scale in Nevada, which can make batteries for about 200,000 EVs per year. Panasonic (Japan) controls approximately 20% of the market and has a joint venture with Tesla in the Nevada factory. More than 60% of the batteries produced by Panasonic are currently going to Tesla. LIB demand would increase tenfold by 2030.(5)
The European Commission recently approved a $3.5 billion fund for the EV battery supply chain. Belgium, Finland, France, Germany, Italy and Sweden are part of the program, boosting the so-called Alliance for European Batteries, which integrates more than 400 actors from the mining, industrial and recycling sectors.
The US disclosed its position in December 2017 with Trump’s Executive Order “on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals”, aiming to break the dependency of the country on foreign resources, especially minerals that are vital to the nation’s security and economic prosperity. These are the minerals they believe would result in strategic vulnerability for both the economy and military because of adverse foreign actions, natural disasters, or other disruptive events that could break the supply chain.(6)
China has control over 60% of the battery and lithium mining market. Since 2017, it has been the largest EV producer. In 2010, the government considered EVs as a strategic emerging industry. Five years later, it stipulated that the development of batteries would be one of the priorities of the 13th Five-Year Plan (2016-2020), as well as the “Made in China 2025” program.
The need for lithium will continue to grow as LIB continues to gain pace. Wireless electronic devices saturate the market, vehicles of all kinds are going electric (Tesla soon will build Cybertruck). We must also keep the robotics industry in mind and the development of capitalist exploitation of space. We recently witnessed the launch of astronauts to the International Space Station (and their successful return). The Crew of the Dragon capsule was transported into outer space by the Falcon9, a rocket designed and manufactured by SpaceX, another company owned by Musk. It’s the first time a private company has taken human beings into space. Once on the International Space Station, the crew installed brand new LIBs. As part of the Commercial Crew program, NASA is making contracts with private US companies to transport people and goods to the station. Blue Origin, Jeff Bezos’ aviation company, has now joined competition. In November 2016, Obama signed the “space law” to promote private space exploration. On April 6 2020, Donald Trump signed an Executive Order concerning the commercial exploitation of the natural resources of the Moon and other celestial bodies. In the near future we might see mining robots in space, which will need serious energy reserves, which means batteries.
EV and battery production seem to be consolidating the supply chains. Each element which makes up the system is under development and innovations are regularly occurring. Next generation mega-factories are being built on every continent; companies are focusing on diverse markets, integrating, competing, doing research, and being at the highest possible level of production. In September, Tesla will launch a new media initiative: “Battery Day”. Musk is expected to announce that his new factory in Berlin will be producing batteries with entirely new technology. Surely, batteries will diversify and their performance will improve. Recycling processes are accelerating and will be strengthened.
Consolidating the supply chain also means ensuring access to metals and minerals, that is, securing availability and lowering the cost of raw materials. With regard to cobalt, Tesla has already signed a contract with Glencore, which will provide 6,000 tons extracted in the DRC per year. But lithium, unlike cobalt (which 2/3 of its global existence is in the DRC) has a wide market existence, and no evident political obstacles to extraction.
According to the recent US Geological Survey report (USGS) world lithium deposits in descending order are Bolivia, 21 million tons; Argentina, 17 million tons; Chile, 9 million tons; Australia, 6.3 million tons; China, 4.5 million tons; Congo (Kinshasa), 3 million tons; Germany, 2.5 million tons; Canada and Mexico, 1.7 million tons each; Czechia, 1.3 million tons; Mali, Russia, and Serbia, 1 million tons each; Zimbabwe, 540,000 tons; Brazil, 400,000 tons; Spain, 300,000 tons; Portugal, 250,000 tons; Peru, 130,000 tons; Austria, Finland and Kazakhstan, 50,000 tons each; and Namibia, 9,000 tons.(7) New deposits continue to be discovered in countries near the EV or battery production plants (China, Europe, US). New techniques are being developed to exploit previously unviable deposits. Tesla hopes to develop exploitation in the so-called Lithium Valley, located just a few miles north of its Gigafactory1.
Lithium is mined in two ways: from hard rock (Australia) or by evaporating the brine that covers salt plains (Argentina, Chile, Bolivia). In 2019, Australia extracted 42,000 tons of mined lithium content, followed by Chile with 18,000 tons, China 7,500 and Argentina 6,400. The main lithium producers are Albemarle Corp (US), Jiangxi Ganfeng Lithium (China), SQM (Chemical and Mining Society of Chile) and Tianqi Lithium Corp (China) which together represents 50% of the global market. Orocobre (Australia) and Livent Corp (US) are two other highly developed companies working in Latin America.
Global carbonate lithium demand is expected to grow from 300,000 tons in 2019 to 1.1 million tons a year by 2025, according to Fastmarkets analysis. S&P Global Market Intelligence forecasts lithium carbonate demand to grow 536,000 tons per year.(8)
Some analysts argue that at the moment there is an oversupply, that more than enough lithium is stockpiled. But some also believe that there will be a bottleneck as demand and consumption accelerates, given that the process of obtaining lithium carbonate from brine is slow. Citi investment bank, in a recent report, said that the price of lithium is approaching a bottom after a 67% price plunge from $20,000 a ton (2018) to $6,500. Its price could be up to $9,000 per ton by 2030.(9)
Raw material suppliers
A recent World Bank report indicates that if the world is to reduce global warming, more than 3 billion tons of minerals and metals will be required by 2050 (+500%) in order to deploy sufficient solar, wind and geothermal power, as well as create energy storage, to have a chance of limiting warming to 2 degrees Celsius by 2100.(10) The Andes mountains range are one of the most important reservoirs in the world for many of these elements. Lithium is no exception.
Lithium carbonate and lithium hydroxide production is being developed according to the needs and requirements of battery and EV producers, together with other interests surrounding them. Alternative energy companies (e.g. solar and wind power) are a bit part of this. All these actors have taken dominant positions in the political system. Whether for cost analysis, fear of political instability or lack of submission by different governments, from their perspective, lithium-rich countries and mining companies should only be concerned with lithium extraction and lithium carbonate production; at best, with developing lithium hydroxide production.
Argentina and Chile have regulatory frameworks favorable for the arrival of all kinds of mining-extractive investments. In both cases, the exploitation of the salt flats is granted to private companies. There is no legal framework that regulates lithium extraction. Explorers and exploiters pay small royalties to the provinces where deposits are located and a fee to the owners of the land. In one sense, Argentina’s lithium industry is still an unprofitable mining development compared to others, even if the demand grows exponentially, as indicated by Formillo. Argentinian lithium carbonate (and chloride) exports are relatively small in relation to the country’s total exports (0.3%), even within the mining sector (5.4%). Both countries, however, insinuate that they are seeking industrialization. Argentina´s new government proposed moving towards battery production, integrating auto parts manufacturers to work to replace combustion buses fleet by EV. Either way, while these projects remain as drafts, major players from the US, Europe, and Asia won´t stop their frantic efforts to secure this critical point in the supply chain.
In 2010 Bolivia adopted the National Strategy Plan for the Industrialization of Evaporative Resources. The first stage was to produce lithium carbonate in pilot plants. The second stage was to design and build industrial plants for these products, under the control of the Bolivian State. And the third stage was the production of cathodic materials and LIB, with participation of foreign companies that would contribute technology. The assembly of the lithium carbonate pilot plant began in 2012 and was inaugurated in 2013, obtaining battery grade lithium carbonate with 99.6% purity by 2015. In August 2016, the government signed contracts for the sale of lithium carbonate for export to China and a preferential trade agreement with India. The amount of production however remained very low (5 tons of lithium carbonate per month) although it was planned to establish the necessary structure to produce 30,000 tons of lithium carbonate per year. In 2017, the state-owned company Bolivian Lithium Fields (YLB, Yacimientos de Litio Bolivianos) was created to lead the process. In April 2018 a German company, ACI Systems Alemania, was awarded the construction of batteries and a lithium hydroxide plants. Shortly after came the overthrow of Morales and the process was cut short.
Paradoxically the lithium industry in Bolivia seems to emerge as an underdog. The resources in the Uyuni brines are immense but contain high levels of magnesium, and separating the magnesium from the lithium is a chemically/energy intensive process that adds to the cost of extraction. Also, rain and snow slows down the evaporation process. In 2018 sales to foreign market reached 110 tons of lithium carbonate and not a single ton was sold in 2019, according to YLB.(11) Chile and Argentina have far higher-quality reserves of lithium and more favorable climatic conditions for this type of lithium mining. Bolivia’s poor infrastructure also makes operations more expensive. Mining sectors as part of the coup government in Bolivia revealed that there is no intention to reactivate any agreement like the one signed with the German company to produce batteries. Instead, they recognize they are willing to move forward by reassessing contracts already signed to produce and supply lithium carbonate to Chinese and Indian companies.
This global energy reconversion process is a capitalist reconversion. Is an attempt at salvation in the face of the evidence of the crisis of production and consumption system based on fossil fuels. It certainly represents a fight of cutting-edge technology for the survival of ecosystems, a sustainable electric system, a struggle against global warming and a job source generation as well as a kind of new relationship with nature. But is at once a new phase in the history of dependency and plundering in Latin America.
Neoliberalism in the region brought about a way of appropriating and re-functionalizing territories that persisted over time. Today it is still represented in the so-called Integration of Regional Infrastructure in South America (IIRSA) and the Puebla Panama Plan. Both make up a continental blueprint (in many cases implemented) to promote the competitiveness of private companies, designed by the Inter-American Development Bank (IDB), the Andean Development Corporation (CAF) and Fonplata in 2000 endorsed by regional governments till today. It consists in the development of roads, optical fibers, oil and gas pipelines, electro-ducts, info-ducts, railroad lines, bridges, tunnels, from Mexico to Tierra del Fuego. It is a scheme to cheapen and accelerate the transfers of the so-called strategic resources from Latin-American regional economies to major production and consumption centers around the world.
If we take a look at the landscape of geopolitics of lithium in its current state, we may see that a real leverage it´s at the financial and strategic value based on the scientific and economic knowledge that promotes a hi-tech chemical and assembly industries, in addition to the rest of the EV manufacturing phases, as well as the energy supply networks and power generation.
Lithium does not relentlessly opens the path to wealth. The current situation, the available projects and the role that Chile, Argentina and now Bolivia appear to have assumed insert themselves as commodity suppliers for the development and survival of capitalism. This is what the World Bank suggests when they say in the aforementioned report that “resource-rich developing countries will be major contributors to the clean energy future by producing a significant part of these strategic minerals and supplying them to the global market.”
Latin America managed to break apart this dependency logic at some points in history. There are plenty of examples. The 21st century Latin-American integration process where Hugo Chávez had a leading role is the most recent enlightening experience, e.g. ALBA-TCP, the Bolivarian Alternative for the Americas-Treaty of Commerce of the People, proposed by Chávez and Fidel Castro in 2001, a mechanism to schedule the public, economic and trade relations between countries, as an alternative to the market competition logics, encouraging cooperation and synergies from socialist values, local cultures and solidarity.
It remains as a possible horizon. Bolivia could not stand alone in its audacious maneuver to break into the geopolitics of lithium with sovereign decision. The countries of the region were not up to the task. That´s why multidimensional integration guided by collective interest, sovereign decision and solidarity seems to be the way to liberate the enormous popular forces that exists in the region and resisted –and in many cases defeated imperialism, in order to advance in transformative economic programs, definitively breaking apart the bonds of dependency in order to take these peoples to a new stage of possible future.
10 Minerals for Climate Change: The mineral intensity of the Clean Energy Transition, May 2020.
– Kazimierski, Martin. 2019. Energy transition, principles and challenges: the need to store energy and the potential of the lithium-ion battery. In Lithium in South America. Geopolitics, energy and territories / Bruno Fornillo [et al.] El Colectivo; CLACSO; IEALC- Institute for Latin American and Caribbean Studies. Available at: http://www.exactas.unlp.edu.ar/uploads/docs/libro_litio_en_sudamerica.pdf
– Formillo, Bruno. 2017. Latin America and its “white gold”. What to do with lithium?
– IDB Report. 2019. Lithium in Argentina. Opportunities and challenges for the development of the value chain. Andrés López, Martín Obaya, Paulo Pascuini, Adrián Ramos. Available at: https://publications.iadb.org/es/litio-en-la-argentina-oportunidades-y-desafios-para-el-desarrollo-de-la-cadena-de-valor
– Ceceña, Ana Esther; Aguilar, Paula Aguilar; Motto, Carlos. 2007. Territorialidad de la dominación Integración de la Infraestructura Regional Sudamericana (IIRSA)