Comment and analysis - The climate crisis: Latin America’s ‘Lithium triangle’ holds key to a low-carbon future

Don Smith, Editor, IBA Journal of Energy and Natural Resources LawThursday 5 March 2020

Two million EVs were purchased in 2019, but with price parity between electric and internal combustion vehicles expected by the mid-2020s, sales are expected to rise to ‘10 million in 2025, 28 million in 2030 and 56 million by 2040’, according to Bloomberg.

Governments across the world are already beginning to push for EVs: in 2018, a German-owned firm called ACI Systems publicised an agreement with the government of Bolivia to develop lithium resources for use in German-built EVs. And California estimates that to achieve its 2030 emissions target, four out of ten new vehicles must be zero-emission.

As a result, the United States Geological Survey has outlined lithium battery manufacture as having ‘the largest growth potential of any sector of the lithium industry’. In the past five years, the global demand for lithium has risen exponentially. In 2015, demand for lithium carbonate exceeded 150,000 tons; by 2025, the world may well need over a million to underpin demand for e-mobility tech.

In response to the enormous interest in batteries, the World Economic Forum has established the Global Battery Alliance (GBA). ‘Mobile technology and a low-carbon future are unthinkable without batteries,’ says the WEF. ‘[The Alliance] will catalyse and accelerate actions towards a socially responsible, environmentally sustainable and innovative battery value chain to power the Fourth Industrial Revolution.’

One of the GBA’s first accomplishments was the September 2019 report A Vision for a Sustainable Battery Value Chain in 2030. According to the report: ‘With the right conditions in place, batteries are a systemic enabler of a major shift to bring transportation and power to greenhouse gas neutrality by coupling both sectors for the first time in history.’ The Alliance posits batteries as the key to ‘transforming renewable energy from an alternative source to a reliable base.’

While lithium can be found around the world, the abundance of the compound, coupled with low extraction costs, have led to Argentina, Bolivia and Chile being coined the ‘Lithium Triangle’. Because of how the deposits are formed in these countries, there isn’t a requirement for high fossil fuel use or explosives in extracting lithium. This is not the case for the lithium found in rocks in China, Australia and elsewhere, though experiments are under way to extract it from hectorite clay.

Of course, with accelerated mining and extraction come other environmental issues, including the consequences of production, routine daily use and disposal of lithium, which will need additional research to predict the long-term effects across the planet.

More specifically, communities within the ‘Lithium Triangle’ may be at risk of losing a crucial resource: water. As lithium deposits are found in salt flats, the evaporation process used in production of lithium will mean removing water from the world’s driest ecosystem. Scientific research into this problem is sparse – or produced by mining companies operating in the area already, and therefore potentially lacking in credibility. There is a critical need to ensure that states strike a balance between moving towards a low-carbon society and ensuring environmental justice for those indigenous communities who will be most affected by lithium mining.

It also remains to be seen whether states in the ‘Lithium Triangle’ will adopt policies that ensure the state plays an active role in the economy through investment in science, tech and industry, or whether lithium will continue to be exported as a raw material. While countries rich in lithium could be well-placed to bolster their economies through mining the compound, there is a very real risk of states falling victim to resource curse – the paradox that countries with an abundance of natural resources tend to fare worse in areas including economic development and have weaker democratic frameworks.

As Argentine lawyer Florencia Heredia notes, lawyers will play a fundamental role in helping to define and develop business relationships that underpin this global effort to develop electric vehicles and other technologies powered by lithium batteries. The legal profession will also be critical to ensuring the transition to a low-carbon future incorporates fair treatment and access to justice for communities affected by mining activity and that extraction companies and states adhere to best regulatory practices.

‘[T]he role that lawyers will play in ensuring the development is done in environmental and business-sensible ways provides great opportunities as well as challenges,’ says Heredia. ‘As lawyers, we need to begin to focus on this potentially revolutionary business.’