LITHIUM: CAPITALIST EXTRACTIVISM AND DEPENDENCY IN LATIN AMERICA

Facundo Escobar (UWI Data)

https://uwidata.com/13244-lithium-capitalist-extraction-and-dependency-in-latin-
america/

Here we present the first contribution in a series of articles that we will publish on common
goods, capitalist extractivism and dependency 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” (Fornillo 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.

The Tesla Model S weights 4,941 lbs. Its battery pack weighs approximately 1,200 pounds.
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.

Li-ion Batteries
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)

Strategy
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.

Availability
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
Fornillo. 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.

Bolivia
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.

Dependency
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.

Notes

1 https://www.juniorminingnetwork.com/junior-miner-news/press-releases/1952-tsx-
venture/nrm/80863-noram-reviews-global-lithium-supply-and-demand-as-context-for-
developing-the-zeus-lithium-claystone-deposit.html

2 https://www.intheblack.com/articles/2020/08/01/electric-vehicles

3 https://www.bloomberg.com/news/articles/2019-08-05/the-top-miners-are-split-on-how-to-
chase-the-ev-battery-boom

4 https://www.forbes.com/sites/korihale/2020/06/22/tesla-supercharges-africas-cobalt-
concerns-with-new-glencore-deal/#205353524664

5 https://seekingalpha.com/article/4289626-look-top-5-lithium-ion-battery-manufacturers-in-
2019

6 https://www.whitehouse.gov/presidential-actions/presidential-executive-order-federal-
strategy-ensure-secure-reliable-supplies-critical-minerals/

7 https://pubs.usgs.gov/periodicals/mcs2020/mcs2020-lithium.pdf

8 https://www.spglobal.com/platts/en/market-insights/latest-news/metals/073120-global-
passenger-ev-sales-forecast-to-reach-62-million-units-by-2024-mi

9 https://www.forbes.com/sites/timtreadgold/2020/07/06/tesla-powers-up-lithium-and-other-
battery-metals-will-follow/#5d837a852d58

10 Minerals for Climate Change: The mineral intensity of the Clean Energy Transition, May
2020.

11 https://publications.iadb.org/es/litio-en-la-argentina-oportunidades-y-desafios-para-el-
desarrollo-de-la-cadena-de-valor

Main sources
– 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

– Fornillo, Bruno. 2017. Latin America and its “white gold”. What to do with lithium?

https://www.nuso.org/articulo/america-latina-y-su-oro-blanco/

– 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)

https://casamdp.files.wordpress.com/2013/08/cecec3b1a-iirsa.pdf