Lithium, also known as white gold, is an important component in rechargeable batteries. These batteries are used in portable technology such as cell phones and laptops, as well as large scale electrical components. Specifically, Lithium-ion batteries store energy for solar panels, electric vehicles, and wind turbines making the resource essential for shifting away from fossil fuels. As a result, demand for lithium is on the rise, and the global consumption of lithium increased by over 40% in 2022.
Lithium is mostly extracted from brine lake deposits or salares, as these locations have the highest concentration of the mineral. While there are several salares in the United States, the most lithium-rich salares are in Bolivia, Chile, and Argentina. In fact, the overlapping area between these countries is home to over half of the world’s lithium, garnering this region the title of the “Lithium Triangle.”
The US has several domestic lithium projects such as Abermale’s mine in Silver Peak Nevada or Lithium Americas’ upcoming Thacker Pass mine on the Oregon-Nevada border. Even so, these mines cannot match domestic demand, hence why the US has already started working with Lithium Triangle nations and imported over 90% of its lithium from Argentina and Chile between 2016-2019.
Demand for Clean Energy and Lithium
The Biden Administration recently passed legislation investing in clean energy and the lithium industry. The Bipartisan Infrastructure Law included an emphasis on electrical vehicles and clean energy technologies. Specifically, the deal contained a $65 billion investment in innovations within the sphere of clean energy as part of the overall goal to become a zero-emissions economy. The following year the administration passed the Inflation Reduction Act which provided funding to domestic-based clean energy projects and battery production. These two bills represent a conscious effort to enhance US energy production, thus requiring more lithium.
Several Republicans are skeptical of the Inflation Reduction Act, claiming that the subsidies for battery production would end up supporting Chinese companies. Republican Frank Lucas wrote a letter to the Department of Energy questioning a grant for Microvast, a company with Chinese ties. These concerns highlight the larger issue of competing with China for control of the lithium industry.
Competition with China
China is the US’s main rival in lithium battery technologies, as well as the electric vehicle sector. In a recent speech, Secretary of State Antony J. Blinken reaffirmed that the US strategy towards China is based on economic competition, especially through technological production and foreign influence. Meanwhile, Chinese companies are at the forefront of battery production and several Chinese mining companies have purchased shares in Lithium Triangle operations.
The Department of Energy recognizes a Chinese dominance on the lithium-ion battery supply chain. This power is increased through investment in the mining process. The DOE approved National Blueprint for Lithium Batteries highlights working with allies to ensure a steady supply of the critical mineral and create more domestic processing sites. Investing in the Lithium Triangle could help the US compete by counteracting China’s recent acquisitions.
Extent of Involvement
In June of 2022, the US announced its Minerals Security Partnership in hopes of addressing the rising demand for critical minerals used in clean energy; however, the Lithium Triangle countries were not included in this partnership. Although the US recognizes a need for lithium importation, it is not set on partnering with these South American countries. This leaves involvement in the Lithium Triangle to the private sector through companies such as Abermale and Lithium Americas.
In examining this involvement, it is important to note that China has already beat out US involvement in Bolivia as the government has recently partnered with several Chinese firms to manage the country’s lithium mining. Meanwhile, Chile’s mining sector is heavily state controlled with only two companies allowed to operate, again limiting options. Argentina is more open to foreign companies with 36 projects as of 2023. The success of American owned company Livent demonstrates an opportunity for more private involvement in the region. Still, additional companies in Argentina may need US financial support because of the overall risk in doing business within the country.
The Inflation Reduction Act provides a potential for these partnerships. The plan includes tax cuts for foreign companies within the battery production industry. That being said, this financial support only applies to countries with US free trade agreements which neither Argentina nor Bolivia have. Several Republicans, on the other hand, prioritize supporting domestic mining projects rather than expanding these financial partnerships to the rest of the Lithium Triangle.
Ecological Damage
Another issue to consider with these lithium mines is the local ecological threat. Throughout the Lithium Triangle, mining operations resulted in a decrease in the Flamingo population as well as general harm to the nearby wetland nature reserves. Additionally, the process of water evaporation needed to extract lithium is hurting transandean Indigenous populations by depleting their water supply. With increased US involvement in the region, the mining operations would only grow to match American demands and as a result the potential for further harming the environment and local communities would increase as well.
The debate around American involvement in the Lithium Triangle boils down to whether the private and domestic sectors can provide enough to match US demands or if the government has to invest more. No matter what, the International Energy Association predicts that the demand for lithium will rise over 90% if countries hope to meet the Paris Agreement in the next couple of decades, so the importance of the lithium industry is not going away.
