Lithium is already a key ingredient in the production of lithium-ion batteries that power everything from cell phones to electric cars.
More importantly, lithium is also considered by the United Nations as a “pillar of a fossil fuel-free economy” and an important energy storage method of the clean electricity grid of the future. As a result, lithium has become one of the most sought-following commodities in the world with sales prices increasing by more than 500% within the past two years.
RT reported, according to political analyst Timur Fomenko, due to the importance of lithium, the administration of US President Joe Biden has placed China in the focus of competition for the top spot. The war between the two countries is divided by who can locate and exploit lithium mines around the planet. Whoever controls the lithium supply chain wins the No. 1 spot in this important industry.
In fact, China is dominating both the lithium quantity and the mining capacity. Specifically, China is currently ranked 6th in the world in terms of total lithium resources (5.1 million tons), and 4th in mining reserves (1.5 million tons). The United States has more lithium resources (9.1 million tons), but mined reserves are only 750,000 tons. Or as Australia also has lithium reserves of 5.7 million tons.
Worth mentioning, the US is losing control over the region rich in lithium reserves, Central and South America. On the contrary, China is gaining a lot of advantages in these areas.
Latin America alone owns 56% of the world’s lithium reserves and is concentrated in Bolivia, Argentina, Chile, also known as the “lithium triangle” and Brazil. Of which, Bolivia currently has 21 million tons of untapped lithium, Argentina has extracted 2.2 million tons of the total 19 million tons of resources it owns. Mexico also holds 1.7 million tons of lithium. Now, the US and China are competing for access to the huge lithium supply there.
As the geopolitical and economic battle between the US and China heats up, Beijing has sought to invest in various lithium mining joint ventures across the Americas. In response, the US used the Monroe Doctrine to exert political power. Specifically, the US blocked a Chinese company from mining lithium in Mexico. Or, Canada recently ordered three Chinese companies to divest from mineral companies on national security grounds. Both Mexico and Canada are parties to the USMCA Trade Agreement with the US. This means that it will be easier for the US to invest more in the lithium mines of the two partner countries.
However, Washington’s efforts were not in all cases successful. Because the number one country with lithium reserves, Bolivia, just signed an agreement with a Chinese consortium a few weeks ago to develop two lithium plants. Accordingly, the Chinese company will invest more than 1 billion USD in the first phase of the project.
The United States also faces challenges in Argentina and Brazil, both of which reject the Monroe Doctrine and seek to secure national interests in a more multipolar environment. A year ago, Argentina joined China’s Belt and Road initiative. By July 2022, a Chinese company had completed a nearly $1 billion deal to take over an Argentine lithium company, something the United States might not stop.
In the context of the US being ahead of China in the lithium industry, this is creating a new confrontation between the two economic powers in the Americas region.
