The energy transition, and especially the increased electrification of transportation sector, moves forward at great speed. Its new center is Latin America’s lithium triangle, where new batteries of electric vehicles will be sourced. But there is an inevitable conflict coming between water availability and mining, says Rebecca Bertram.
Driven by both public and private sector commitments and incentives, a growing number of automobile manufacturers are now turning their investment to the production of electric vehicles. According to a recent McKinsey study, their number could as much as quadruple between the years 2017 and 2020 due to decreasing development costs and better mileage. This is great news, as the sector is responsible for about 15 percent of global greenhouse gas emissions.
As such, storage has become the new buzzword of the energy transition, and with it comes the global quest for securing the necessary assets and extracting lithium to manufacture rechargeable batteries. But this may come with high costs for the environment.
The new “gold rush”…
The global demand for lithium – regarded by many as one of the most important metals of the 21st century – has doubled in the past five years. And over 70 percent of the world’s lithium resources is found in three countries: Chile, Argentina, and Bolivia, who make up the so-called Lithium Triangle.
It is not difficult to understand that the three countries put their hopes in the new “white gold rush” and want to extract the metal as fast as possible no matter the environmental or social cost. Perhaps this is somewhat typical for Latin American politics where hopes for a rapid economic development are fueled by the extractive industry.
The three countries employ different strategies to do so. In Chile, the government expects the lithium industry to develop into a $USD 10 billion industry over the next 15 years. Here, the government – after some years of tight regulations – is now doing as much as it can to attract foreign investment in the industry. One of its investment perks is that it offers lithium at a cheaper price for foreign companies that build up industrial operations in the northern parts of the country where lithium is extracted. It lifted regulations and issued the first lithium production and export license in decades in early 2018 to establish itself as one of the biggest exporters of lithium worldwide after Australia.
Bolivia is a different story. The country began extracting lithium on a small scale about 10 years ago. In contrast to Chile, Bolivia does not just want to export the lithium to be processed elsewhere. Its long-term strategy is to transform the country into a manufacturer of rechargeable batteries. Yet it still lacks the technological know-how and financial means to do so. While the country is looking for some involvement by foreign investors, progress has been slow due to these strict conditions placed on the industry.
Therefore, investors are increasingly looking towards Argentina. The government there has cut taxes on the mining industry as an incentive for investors. As a result, its output between the years 2015 and 2018 has increased by a staggering 928 percent.
… comes with high environmental costs
While extraction in the three countries moves forward at different speeds, they are faced with vast uncertainties over the actual environmental impacts that this industry has on local ecosystems.
A thirsty industry
Lithium is extracted by pumping large amounts of water under the earth’s surface, which is subsequently left to evaporate over several months to leave behind the “white gold”. About 500,000 gallons (1.8 million liters) of water is needed to extract one ton of lithium.
But the three extraction regions lie in some of the driest parts of the world, where local communities are already experiencing severe water shortages and stress to their local ecosystems. In Chile’s lithium mining area Salar de Atacama, for example, the lithium mining industry has used up 65 percent of all available water in the region. A direct conflict between lithium mining and water availability thus becomes inevitable.
Already, practically all affected local communities in the three countries – many of them indigenous – are calling for the industry to be regulated. They argue for minimum standards to constrain water usage and to end the sense of secrecy by which the industry is operating to date in all three countries.
Chemicals in the air
Lithium mining also has a direct impact on air quality. The evaporating ponds expose the lithium and other chemicals directly to the winds. As the environmental effects of lithium mining remain largely unknown and unstudied, environmentalists are calling for investments into research in order to better understand the effects that lithium mining has on local ecosystems during and after extraction.
Creating local value
There are also social concerns surrounding lithium mining. Nearby communities’ calls to benefit from the industry are growing louder. Their members would like to see parts of the industry profits to be invested in building local schools, hospitals and better water infrastructure.
But most of all, they want to have a say and in whether a mining project gets the go-ahead. For example, two Argentinean indigenous groups – Salinas Grandes and Guayatayoc – have filed for an injunction against their respective states as well as the national government demanding to be consulted on lithium extraction. The case is currently being reviewed by the Inter-American Court of Human Rights.
The experience of the Lithium Triangle in Latin America thus shows one more dilemma posed by wanting to transform our transportation sector to make it more climate friendly. If the cost of reducing green house gas emissions is environmental degradation, the argument that electric vehicles are a clean alternative to gasoline cars looks questionable.
The biggest players in the lithium triangle – China, South Korean and the US, as well as local governments – must commit to a truly sustainable, transparent and just extracting process. The three countries of the Lithium Triangle, due to their similar geographical characteristics, should take the lead in collectively researching the environmental and social impacts of lithium extraction. Only then will we be able to judge if the lithium road really leads to sustainability.