Here is why there is no real electric car industry without Latin America

Latin America’s natural resources have always held tremendous appeal. Colombian writer, journalist, and Nobel Prize winner for literature Gabriel García Márquez explained that El Dorado – that golden delirium that appeared on numerous maps for many years, changing place and shape according to cartographers’ imagination – became an obsession for the navigators who entered the New World. In a way, this fascination continues to this day.

Today, however, the search is no longer for gold but for the minerals that drive electromobility. Projects related to nickel, copper, graphene, and especially lithium, the heart of batteries for electric vehicles, are advancing at breakneck speed on the other side of the Atlantic.

The alleged “climate emergency” and the manufactured energy crisis put in place to accelerate the energy transition imposed by the United States and Europe are leading to increased demand for minerals.

Latin America plays an essential role in this scenario. Three countries in the region account for 40% of the world’s copper reserves: Chile, Peru, and Mexico. Brazil has 17% of the world’s nickel reserves and the world’s third-largest reserves of graphene (a superconductor made from graphite) after China and Turkey.

Bolivia, Argentina, and Chile have 64% of the world’s lithium reserves, and if you add the reserves of Peru, Mexico, and Brazil, they come to 68%.

“In this new technological cycle, Latin America and the Caribbean have a key role to play,” analyzes Tamara Lajtman and Aníbal García Fernández, researchers at the Latin American Strategic Center for Geopolitics (Celag).

In northern Chile, in the Antofagasta region, which produces 16% of the world’s copper and 54% of Chile’s, nearly 20 active projects will require investments of up to US$19 billion over the next four years to increase copper production in the world.

Major companies like Codelco (one of the world’s leading copper producers), Albemarle, SQM, Glencore, BHP, Yamana Gold, Mantos Copper, and Antofagasta Minerals are expanding their operations to meet the growing demand because electric and hybrid cars need copper.

According to a recent analysis published by the Economic Commission for Latin America and the Caribbean (ECLAC), the average amount of copper used in an electric vehicle is four times the amount consumed in a conventional vehicle with an internal combustion engine, about 20 kilograms per unit.

Against this backdrop, according to the UN agency, copper demand related to electric vehicles is expected to account for about 10% of total copper demand by 2030, significantly more than the 2% of total demand it currently accounts for.

According to the government, Peru, the world’s second-largest copper producer, has about twenty such projects totaling two hundred and US$11 million in investment.

But if there is one mineral that has aroused real passions in both Latin America and the rest of the world, it is lithium.

“Interest in the development of lithium deposits in the Latin American region is reaching its peak with the acquisition of mining assets with pre-feasibility and reserve calculations,” said Pablo Rutigliano, president and founder of the newly formed Latin American Lithium Chamber.

The countries of the lithium triangle (Argentina, Chile, and Bolivia) are gearing up to take advantage of this boom. In Argentina, 18 projects are in pre-feasibility studies, while two are already in operation: Sales de Jujuy (in which Orocobre, Toyota Tsusho, and Jemse have stakes) and Minera del Altiplano (owned by the US company Livent).

In addition, Chinese giant Ganfeng Lithium (the first Chinese producer of this metal for lithium-ion batteries) is building a plant to extract this material in the Northeast of Argentina.

In Chile, Albemarle (also one of the largest suppliers of lithium for electric vehicle batteries) has inaugurated a new plant in which the company has invested US$500 million to double its lithium production. Also there, Sociedad Química y Minera (SQM), the fourth-largest lithium producer in the world, is preparing to increase its lithium hydroxide production.

Bolivia has the world’s largest lithium reserves of 21 million tons, most of which are located in the Salar de Uyuni in the Andean region of Potosí, and to a lesser extent in the Pastos Grandes deposits, also in Potosí, and Coipasa, which the department of Oruro shares with Chile. The state controls 100% of these three salt flats.

ANDES’ WEALTH

Bolivia currently has salt industrialization facilities, a potassium chloride plant, a lithium carbonate pilot plant, and a larger plant under construction expected to produce 15,000 tons, Rutigliano said.

The company also has a pilot plant for cathode materials and will soon open another plant for lithium-ion batteries, as well as a research and technology center in Potosí. In Peru and Mexico, on the other hand, there are already companies that have obtained a concession for mining but have not yet started exploiting the mineral.

Mexico’s case has caused some mistrust among investors after the Mexican Congress reformed the mining law last April to allow only the state to mine lithium, making private participation questionable.

Chinese company Ganfeng Lithium, which owns 100% of the only lithium deposit discovered in Mexico, plans to begin mining in Sonora, northern Mexico, next year. Some of the production would be destined for Tesla’s US plant and Asia.

“Lithium goes where batteries are made, China, Japan, and South Korea. In the rest of the world, production is just starting,” says Daniel Jiménez, a partner at consulting firm iLi Markets.

Like Chile, Mexico wants to control the entire production chain for this material. The focus is on the resources that the exploitation of this mineral will generate. According to Celag estimates, lithium exports in six Latin American countries will reach US$531 billion annually by 2040: Bolivia (US$210.7 billion), Argentina (US$193.5 billion), Chile (US$96.7 billion), Mexico (US$17.1 billion), Peru (US$8.8 billion) and Brazil (US$4.5 billion).

By 2040, lithium would become the main export product of Bolivia, Chile, and Argentina. “It could account for 81% of total exports,” Lajtman and García Fernández said. “A sovereign regional initiative would increase tax revenues and thus the potential redistribution of wealth,” they conclude.

With information from Latina Press