Inspenet, July 29, 2023.
The EU could have full access to Chile’s lithium reserves.
Lithium has become one of the most sought after resources in the world due to its importance in the manufacture of batteries for electric vehicles. That is why the main powers seek to ensure access to this mineral to maintain their competitiveness in the market. Aware of its importance, the European Union (EU) has decided to sign a significant agreement to guarantee the supply of this “critical raw material”.
Chile and the European Union seem to be a perfect match. On the one hand, Europe has the need and the economic resources to acquire lithium, while Chile has the second largest reserves of this mineral in the world and was looking for an important buyer.
This week the signing of an agreement between the president of the European Commission, Ursula von der Leyen, and the Chilean president, Gabriel Boric with the aim of cooperating in the field of raw materials. The agreement reflects the recognition that Chile holds valuable reserves of both lithium and copper and offers an opportunity for both parties to benefit from each other.
The agreement means that Europe will be able to get access to the lithium and copper it needs , while Chile will see its industry boosted through collaboration with the EU. In other words, the EU seeks to secure a privileged position to access these important raw materials and is willing to invest in it.
This agreement focuses on five main areas: the integration of sustainable raw material value chains, research collaboration, the adoption of international environmental standards, investment in employment and infrastructure, and the strengthening of education.
Chile and its lithium reserves
Chile, which is located in the Lithium Triangle along with Argentina and Bolivia, has abundant lithium reserves , being only surpassed in extraction worldwide by Australia. However, the profitability of these lithium mines in Chile has been a cause for concern. The country sought to reverse this situation and with the collaboration of the EU, it has found a first level partner to effectively take advantage of its natural resources.
Lithium has become a highly coveted commodity. In 2022, its demand increased dramatically by 900%. Known as “white oil”, its relevance continues to grow due to the rise of the electric car. In a short period, lithium has gone from being an underexploited resource (approximately 9,000 tons per year in 1995) to a highly sought after one (more than 100,000 tons in 2022).
The relevance of lithium mines is crucial for all car manufacturers, since their future is at stake. Europe’s initiative seeks to support one of its most important industries.
In addition, this action also represents a challenge to China, since Europe has established agreements with various countries that produce raw materials, including Canada and Ukraine in 2021, Kazakhstan and Namibia in 2022 and Argentina in 2023. However, despite these agreements, lithium continues to come largely from large international producers and in the race for the precious element, China is ahead of the competition.
Unfortunately for China, the appearance of new lithium mines in countries like Chile, added to other factors such as a slowdown in some electric vehicle markets, is helping the lithium price rush to stabilize. As it gains importance in the market, it also shows signs of equilibrium.
However, it is not yet clear to what extent there will be enough supply of lithium to meet all the demand. On the one hand, the electric vehicle market is highly volatile and on the other, lithium is a material whose production is relatively recent. Faced with this situation, Europe has taken a strategic position to guarantee its access to this resource.
Source and photo: https://www.xataka.com/empresas-y-economia/europa-necesita-litio-ha-encontrado-lugar-perfecto-donde-conseguirlo-minas-chile-que-nadie-queria-explotar/ amp
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