Lithium Production and Development

In May 2023, SQM, the world's second-largest lithium producer, reached a long-term agreement with Ford Motor Company to provide battery-grade lithium carbonate and lithium hydroxide. In July 2023 the firm also entered a new long-term purchase agreement with LG Energy Solution to supply over 100,000 t of battery grade lithium carbonate and lithium hydroxide during 2023-2029 period. In June 2024, SQM also entered a long-term supply deal with Hyundai and Kia. “The agreements reached with Ford Motor Company and LG Energy Solution not only strengthened our leadership in the lithium industry but also boost the transition towards more sustainable global mobility,” commented Carlos Díaz, executive vice president of lithium at SQM.

In February 2024, Albemarle, the world’s largest lithium producer, entered a long-term supply agreement with BMW to supply battery-grade lithium hydroxide starting in 2025. This partnership also involves joint research initiatives aimed at advancing lithium-ion battery technology for safer and more energy-dense solutions​. In 2023, the firm and Ford Motor Company entered a five-year supply agreement that starts in 2026 for Albemarle to supply more than 100,000 t of battery-grade lithium hydroxide for approximately 3 million future Ford EV batteries.

Australia is the world’s current leading supplier of lithium, producing 86,000 t of lithium in 2023. However, Australia’s operations are dominated by hard rock production, causing environmental concerns about their long-term sustainability. Lithium derived from hard rock is three times as carbon intensive as brine operations. With the rise in responsible mining and consumer consciousness, lithium will increasingly need to be sustainably sourced. The lithium triangle—a high-altitude area straddling Chile, Argentina and Bolivia, which holds 56% of the world’s lithium reserves — presents itself as the perfect opportunity. “There is enough lithium in Chile alone to satisfy the world's needs, which can be sourced entirely from brine,” said Hall.

Chile: the lithium triangle’s hypotenuse

Chile is the world’s second-greatest producer of lithium, responsible for 44,000 t in 2023. The signing of the Memorandum of Understanding between SQM and Codelco in December 2023 was a landmark event for Chile’s lithium industry, enabling SQM to increase production by 30,000 t/y of lithium carbonate equivalent and extend operations for 30 years. Codelco will own a slight majority share at 50+1%, according to the contract. Carlos Díaz, executive vice president of lithium at SQM provided insight: “The Codelco-SQM partnership aspires to a total additional production for the period 2025-2030 of 300,000 t of LCE and 280,000 to 300,000 t/y of LCE between 2031 and 2060, and Chile will receive 85% of the operational margin through various channels from 2031 onwards.”

President Gabriel Boric announced Chile’s National Lithium Strategy (NLS) in 2023 to enhance private sector involvement across the lithium value chain while maintaining selective state control in public-private partnerships. However, many industry players remain skeptical about the how effective the NLS will be. “The government has given Codelco and Enami exclusive rights to develop significant lithium deposits, potentially causing conflicts with existing concession holders. Codelco purchased a project from Lithium Power International but admits it lacks the capacity to develop all projects alone and has partnered with SQM for its Atacama project,” said Jorge Riesco, president of Sonami.

Investors question the ability of state-owned Codelco to pivot to lithium production, given its history as a copper producer. The miner’s US$244 million acquisition of Lithium Power International’s Blanco project in the Salar de Maricunga has raised eyebrows. Codelco will also face the challenge of incorporating DLE, as the project’s initial plan to operate with evaporation ponds was rejected under the NLS. The firm, however, marches on: "Codelco has already begun the process of searching for a strategic partner in Maricunga ... our board will choose the future partner in the first part of 2025," said Rubén Alvarado Vigar, the CEO.

Argentina

Argentina, currently producing 34,000 t/y of lithium, is on track to become the world's third largest producer by 2027, with the potential to increase output to 260,000 t/y, indebted to the 18 projects forecast to start production by 2027, according to analysis by CRU. Mergers are helping the industry acquire speed. Finalized in early January 2024, the merger of Livent and Allkem is the largest such event in the lithium industry’s history. The combined entity, Arcadium Lithium, according to the company’s estimates, will be the third largest lithium producer by capacity in 2027.

In April 2024, Elon Musk and President Javier Milei met at Tesla’s headquarters in Texas to pledge cooperation to enhance free-market principles and explore lithium mining opportunities. Despite the buzz, the meeting likely does not signify much. As outlined in the Argentinian constitution, natural resources are the property of the provinces, meaning the provinces manage licenses and grant permits for mining exploration and production. While Milei can set the national mining policy and promote investment, ultimately, decisions are made at the province level. Yet, Milei’s enthusiasm will be beneficial. “The current government's commitment to attracting large-scale mining investments is crucial, given the substantial capital required for development,” said Ignacio Fernandez, general manager LATAM at Terra Nova Technologies.

Despite growth, the country faces challenges: “One major hurdle in Argentina is the importation of sophisticated mining equipment, which may not be readily available locally, coupled with currency mobility issues,” continued Fernandez.

The rapid development of the sector could also lead to infrastructure and logistics bottlenecks, as many operations are in remote regions of the country.

Bolivia

Bolivia possesses the world’s largest share of lithium reserves, amounting to 24% of the world’s total. Despite vast reserves, Bolivia has struggled to capitalize on its lithium potential compared to its neighbors, largely due to extraction method challenges and conflicts with indigenous communities. Metaproject CEO Manuel Viera Flores, asked: “What is the use of being rich in the subsoil and poor on the surface? Bolivia has one of the biggest lithium deposits in the world, but also immense poverty because it has not been exploited.”

The Bolivian government has shown a renewed commitment to the metal, aiming to generate US$5 billion from lithium sales by 2025. In July 2023, Bolivian state-owned Bolivia Lithium Deposits (YLB) identified new lithium resources, bringing the total to 23 million t of identified resource. In January 2024, Bolivia's government signed an agreement with Chinese consortium Catl, Brunp, and Cmoc (CBC) to develop a US$90 million pilot plant to extract and process lithium at the Uyuni Salt Flats, with an initial production capacity of 2,500 t/y of lithium carbonate. The plant plans to yield first lithium by year end 2025.

The global white gold rush has begun, and the lithium triangle has ample expertise, reserves, and technologies to meet the world’s evolving needs.