The Atacama desert in Chile holds much of the electric-car future … The Wall Street Journal

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By Ryan Dube Photographs by Tamara Merino for The Wall Street Journal 

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SALAR DE ATACAMA, Chile—Hailed as the Saudi Arabia of lithium, this California-sized chunk of terrain accounts for some 55% of the world’s known deposits of the metal, a key component in electric-vehicle batteries.

As the Chinese EV giant BYD Co. recently learned, tapping into that resource can be a challenge. Earlier this year, after BYD won a government contract to mine lithium, indigenous residents took to the streets, demanding the tender be canceled over concerns about the impact on local water supplies. In June, the Chilean Supreme Court threw out the award, saying the government failed to consult with indigenous people first. 

“They want to produce more and more lithium, but we’re the ones who pay the price,” said Lady Sandón, president of one of two Atacameño indigenous hamlets that filed a lawsuit against the auction. A BYD spokeswoman declined to comment.

Similar setbacks are occurring around the so-called Lithium Triangle, which overlaps parts of Chile, Bolivia and Argentina. Production has suffered at the hands of leftist governments angling for greater control over the mineral and a bigger share of profits, as well as from environmental concerns and greater activism by local Andean communities who fear being left out while outsiders get rich.Production of lithium carbonate equivalentSource: U.S. Geological SurveyAustraliaChileChinaArgentina2016’20050,000100,000150,000200,000250,000300,000350,000tons

At a time of exploding demand that has sent lithium prices up 750% since the start of 2021, industry analysts worry that South America could become a major bottleneck for growth in electric vehicles.



“All the major car makers are completely on board with electric vehicles now,” said Brian Jaskula, a lithium expert at the U.S. Geological Survey. “But the lithium may just not be enough.”

In Bolivia, the government nationalized its lithium industry years ago and has yet to produce meaningful amounts of the metal. Mexico, a smaller player, also recently nationalized lithium. In Argentina, output is only starting to take off.

Here in Chile, where lithium is already tightly controlled, President Gabriel Boric’s new leftist government plans to create a state lithium company after criticizing past privatizations of raw commodities as a mistake. A new constitution, if approved in a September referendum, would strengthen environmental rules and indigenous rights over mining.

“This is a strategic resource for the energy transition,” said Chile Mines Minister Marcela Hernando. Ms. Hernando recently told Chile’s congress that while the government didn’t have the know-how to mine lithium on its own, it would insist on majority control of any joint venture with private firms. 

Evaporation ponds at an Albemarle Corp. lithium mine in Chile.

A brine reservoir, a step in the lithium-extraction process. 

A few years ago, Chile was the world’s largest lithium producer, turning out slightly more than Australia. While Chile has expanded output at its existing operations by 80% since 2016 to about 140,000 tons annually, it hasn’t opened a new mine in about 30 years. It now produces about half as much as Australia, which has quadrupled its output in the past five years, according to the USGS.

Unlike oil, which is produced all over the globe, lithium is less common. South America, Australia and China are the key locations. Outside South America, it’s extracted from hard-rock. In the region, lithium is found in salty, underground water that is evaporated by the sun after being pumped into large man-made ponds. South America’s lithium is less expensive to produce, but miners say the drawback is it takes far longer to build a mine—about eight years.

Chilean officials and environmentalists worry about the impact on water supplies. Willy Kracht, Chile’s undersecretary of mining, said recently that up to 2,800 cubic meters of water are needed to produce one ton of lithium in Chile, versus 70 cubic meters for a ton of copper.

Environmentalists believe that mining has caused some nearby lagoons to dry up, harming the population of wild flamingos that rely on them to feed on shrimp and build nests. “The damage is irreversible,” said Cristina Dorador, a biologist who was a member of a special assembly that wrote the draft for Chile’s new constitution.

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