Latin America holds the world''s largest lithium reserves. The “lithium triangle,” consisting of Argentina, Chile and Bolivia, possesses 68% of the primary global reserves of this resource while Brazil, Mexico and Peru also have important deposits, though less extensive.
The era of fossil fuel energy dominance is reaching its limits, elevating lithium as a strategic resource essential for driving economic development. This shift creates an opportunity for value creation and economic gain through resource exploitation, productive and technological capacity building, and the knowledge that supports the global energy transition and structural transformation.
We are undergoing a profound and unprecedented transformation of energy infrastructure, focused on creating renewable and sustainable energy sources. This shift inevitably heightens tensions between the Global North and South – and between central and peripheral regions – over the distribution of benefits from transformative technologies and control of critical raw materials. Energy has long been at the heart of modern geopolitical dynamics and remains pivotal to global hegemonic power.
The conflict between Russia and Ukraine has disrupted global geopolitics, hastening decisions to push further into the energy transition. The resulting turmoil in trade flows has driven a significant rise in international fossil fuel prices, impacting the energy sector, various industries and consumers alike, with effects rippling through households, businesses and entire economies.
High fossil fuel prices pose significant challenges for many economies while generating unprecedented windfall profits for oil and gas producers. Countries lacking the resources to respond independently are the hardest hit in this prolonged climate of conflict.
Three main factors fuel the hegemonic drive for resource control and appropriation: rising demand, resource scarcity and depletion coupled with competition for dominance. As demand increases and resources like oil diminish, competition intensifies, opening new opportunities for energy alternatives that are reshaping the global power balance in today''s geopolitical landscape.
Lithium has become central to global geopolitics due to its essential role in the shift to a post-fossil fuel world. In response to the Sino-Russian strategic alliance, the United States is working to secure dwindling fossil fuel resources, leveraging its military influence as it faces new challenges in technology, industry and trade within the advancing energy transition.
This competition between the Global North and the Sino-Russian bloc centers on establishing a firm hold over lithium reserves, with South America playing a pivotal role in this power struggle. The region is key to establishing a new green industrial network, securing access to strategic raw materials, and consolidating control over global trade within an emerging technological paradigm.
Latin America’s lithium-rich nations aim to capitalize on the demand surge for this crucial resource, yet their current output falls short of potential. Production remains modest, hampered by technical constraints and the region’s difficulty in keeping up with rapidly growing demand.
A key challenge is the lack of technical capacity to process lithium. When assessing mineral reserves – resources that can be economically extracted with existing technology – outlooks differ significantly across Latin American countries. Calculating reserves involves economic considerations, market conditions, financing, engineering methods, extraction techniques, and legal, environmental and social factors, all of which influence whether a resource can be fully utilized, beyond simply knowing its location.
Lithium deposits fall into three main categories: clay-based lithium, lithium rock deposits often linked with uranium, and lithium in salt flats. This classification matters because the environmental impact varies by deposit type, each presenting distinct technological challenges.
The most important deposits for lithium extraction are salt flats, as their natural conditions allow for more optimal development. This is evident in the concentrations of lithium mainly found in Bolivia (21 million tons – Mt), Argentina (18.3 Mt), and Chile (9.6 Mt). Chile has made the most progress in extraction and exportation. South America is among the top four lithium-producing regions, with Australia leading, followed by Chile, China, and Argentina.
Building a large-scale lithium-ion battery cell industry in Latin America – capable of processing a substantial portion of the region’s lithium output – requires the parallel development of an electric vehicle sector that would demand those batteries.
Without state support and national private investment to drive domestic industrialization, Latin America''s ability to strengthen its lithium value chain remains limited. This constraint partly explains why Asia, Europe and the United States are keen on increasing investments in the region, all while maintaining control over the high-value processing and refinement stages of lithium within their own value chains.
China stands out as the largest investor in lithium extraction, refinement, and processing across Latin America. Unlike other nations, China is positioned as a leader across almost the entire lithium value chain, with the notable exception of raw lithium production, where it ranks third globally and cannot fully meet its domestic needs. This dependency fuels China''s drive to secure a strong foothold in South America, reinforcing its influence as a key investor and leader in lithium industrialization.
China has made significant investments in the Latin American lithium sector, involving Chinese companies such as BYD, Ganfeng Lithium, Zijin Mining Group, and Great Wall Motor. In 2022, BYD won a contract to exploit lithium in Chile for $61 million.
That same year, Ganfeng Lithium acquired Argentina’s Lithea for $962 million to develop the Pozuelos-Pastos Grandes project. In 2021, Zijin Mining Group purchased the Canadian company Neo Lithium for $737 million to exploit the Tres Quebradas deposit in Catamarca, Argentina. Similarly, Great Wall Motor acquired a Daimler factory in Brazil to develop electric cars.
The primary concern surrounding lithium extraction is water conservation. Extracting lithium involves evaporating millions of liters of water, which poses a serious threat to salt flat ecosystems, where environmental degradation is already evident.
In response, traditional evaporation ponds are increasingly replaced by direct extraction methods that use chemical inputs, claiming to reduce contamination and lessen impacts on salt flats. However, these claims remain unproven, and the ongoing exploitation continues to endanger these fragile ecosystems.
Beyond environmental consequences, the industrialization of lithium-rich regions has severely affected nearby indigenous and rural communities. As extraction operations expand, the erosion of collective rights has impacted these communities'' cultural heritage, allowing companies to assert social control and encroach on lands near populated areas.
The lack of strong governance models leaves local populations vulnerable to companies using labor and financial incentives to secure community support for extraction projects, prioritizing investor interests. Moreover, limited oversight of capital flows and resource distribution intensifies local grievances regarding social investment and inadequate responses to environmental impacts.
As lithium becomes an increasingly sought-after resource, new environmental and social conflicts emerge over salt flat conservation, the protection of impacted communities, and control over the wealth generated. South America once again finds itself at the center of a global resource scramble, echoing colonial-era exploitation. However, the region now has an opportunity to counter this pattern by advancing sustainable, eco-friendly, and community-centered development models – a significant challenge for regional governance over the coming decades.
Of the world''s 86 million tons of identified lithium resources, Bolivia possesses 21 million tons, followed by Argentina with 19.3 million tons, and Chile with 9.6 million tons. While Chile has successfully transformed the majority of its available resources into economically viable reserves available for commercial production, Argentina and Bolivia have thus far failed to do so, largely due to unfavorable investment climates and more challenging geographic conditions.
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