"Environment Over Lithium Mining"... Could It Become a Growth Variable for Electric Vehicles? [Global Focus]

Mining Development, Environmental and Ecosystem Damage Controversy... Water Needed for Lithium Production 40 Times That of Copper
South American Resource Nationalism Also Hinders Production... Zero Output Due to Bolivia's Failed Nationalization

On January 7th, citizens in Santiago, the capital of Chile, held protests against the government's plan to contract lithium mining rights. [Photo by AFP]

[Asia Economy Reporter Park Byung-hee] Portugal has the largest lithium reserves in Europe. Since lithium is a key raw material for electric vehicle batteries, there is great anticipation that Portugal's role in Europe will grow in the electric vehicle era. However, in the village of Covas do Barroso near one of the major mines in the north, the Barroso lithium mine, protests demanding the expulsion of the British mining company Savannah Resources, the owner of the Barroso mine, have continued for several years. Local villagers oppose the mine development citing environmental and ecological damage.

According to Savannah, the environmental impact assessment results for mine development were submitted to authorities in May 2000, and the first approval was obtained a year later. However, the final approval has not yet been granted. Portuguese regulatory authorities decided earlier this month that an additional environmental impact assessment is necessary, and on the same day, David Archer, the CEO who served for nine years, announced his resignation taking responsibility for the delay in mine development. Savannah has postponed the start of lithium production to 2026.

◆ Lithium mine development, environmental damage controversy = As the global focus shifts to eco-friendly energy transition, demand for lithium, a key raw material for electric vehicles, solar panels, and wind turbines, has surged. However, as seen in the case of the Barroso mine, there are many instances where mine development is delayed due to environmental damage and ecosystem destruction. This paradoxical controversy arises because lithium, the raw material for eco-friendly electric vehicle batteries, is ironically considered a factor in environmental destruction.

In the United States, Lithium Americas postponed its plan to develop the Thacker Pass lithium mine in Nevada last June. The mine development plan was approved during the Donald Trump administration. However, environmentalists argued that the mine development could threaten the ecosystem of nearby sage grouse and wildlife. After President Joe Biden took office in January last year, a federal court decided that it was necessary to review whether the Trump administration's development permit was a mistaken judgment.

Thacker Pass was expected to become the largest lithium mine in the U.S. If developed, it is estimated to produce 30,000 tons of lithium annually, enough to manufacture 475,000 batteries.

A sign reading "Life Over Lithium," opposing the development of the Thacker Pass lithium mine, known as the largest lithium deposit in the United States, is erected in Humboldt County, Nevada.
Photo by Xinhua News Agency

Earlier this year, when Chinese electric vehicle company BYD secured a lithium mine contract from the Chilean government, local residents protested. They demanded the cancellation of the contract, arguing that lithium mine development could cause drinking water shortages. Chile, the world's second-largest lithium producer after Australia, requires 70 cubic meters of water to produce 1 ton of copper, whereas producing 1 ton of lithium requires 2,800 cubic meters of water, 40 times more. The Chilean Supreme Court ruled that the government should cancel the contract with BYD because it did not prioritize negotiations with local residents.

Residents of Barroso village in Portugal have recently intensified their protests. This is because the entire European continent suffered from extreme heatwaves this year, raising concerns that lithium mine development could cause severe water shortages.

◆ South American resource nationalism = South America hosts the Lithium Triangle, which contains 55% of the world's lithium reserves. The Lithium Triangle spans Chile, Bolivia, and Argentina, covering an area similar to California in the United States. Resource nationalism in these South American countries is also one of the factors hindering lithium production.

According to the U.S. Geological Survey (USGS), Bolivia has 21 million tons of lithium resources in natural form, more than Chile's 9.8 million tons. However, due to failed nationalization, Bolivia currently produces almost no lithium.

The Bolivian government nationalized the lithium industry in 2008 during the presidency of Evo Morales. Morales aimed to make Bolivia a battery and electric vehicle producer based on lithium, establishing the state-owned lithium company YLB and investing $900 million in building lithium extraction plants and infrastructure. However, Bolivia's lithium nationalization policy is widely regarded as a complete failure. According to YLB, Bolivia's lithium carbonate production last year was only 540 tons, an amount Chile can produce in half a day.

Juan Carlos Zuleta, who briefly managed YLB in 2020, pointed out that due to technological shortcomings, YLB's lithium recovery rate from brine is only 9%, making commercial lithium production impossible. In contrast, two major lithium mining companies in Chile reportedly have recovery rates exceeding 50%.

In Chile, efforts to control the lithium industry are intensifying. Gabriel Boric, who took office as president in March, pledged to establish a state-owned lithium company. Additionally, if the new Chilean constitutional amendment passes a national referendum in September, environmental regulations and indigenous rights regarding mine development are expected to be strengthened. The new constitution defines Chile as an ecological state and includes provisions to enhance gender equality, indigenous rights, and social security.

Among the Lithium Triangle countries, Argentina's lithium industry is considered to have a bright future, but its lithium production is still in the early stages.

◆ Lithium supply shortage until 2030 = Concerns are growing that the lithium supply shortage will be prolonged due to various controversies surrounding lithium production.

Kent Masters, CEO of Albemarle, the largest U.S. lithium producer among listed companies, recently pointed out long-term issues in lithium production during an interview, stating that the supply shortage will continue for 7 to 8 years. According to Albemarle's analysis, past lithium production has always been less than expected, with actual production sometimes up to 25% lower than forecasts.

While oil reserves are distributed worldwide, lithium deposits are concentrated in specific regions such as South America, Australia, and China. Industry insiders warn that South America, which holds more than half of the reserves, could become an obstacle to electric vehicle market growth. Another hurdle is the long time required to produce lithium after mine development. Unlike other regions that extract lithium from rock, South America extracts lithium from brine. Although lithium extraction from brine is less costly, mine development takes about eight years.

Amid supply shortages and exploding demand, lithium prices have risen about 7.5 times since early 2021. The European Union's Joint Research Centre (JRC) estimates that lithium demand will increase 60-fold by 2050 compared to current consumption. Due to Russia's reduction in natural gas supply, the EU is accelerating its eco-friendly energy transition and is hastening the preparation of new raw material laws to ease regulations on mining and production of essential raw materials such as lithium, cobalt, and graphite needed for the green era.

This content was produced with the assistance of AI translation services.