Land Of White Gold

South of San Pedro de Atacama lies the largest salt flat in Chile. Stretching over 100 kilometres of what is commonly called the dryest place on Earth, the Salar de Atacama has become one of the country s main tourist sites. Foreign and national visitors alike journey here to experience a walk on this boundless ice wilderness. Such an idyllic tableau almost always engenders a snapshot of that well-known, recurring illusion, where one holds an individual with the palm of his hand. Visitors savour the perpetual peace of the salt flat one last time before returning to their mini bus, that same peace that will ride on through to the end of the night. Yet on the same surface, not far from here, the ground rumbles. Salar brine, pumped deep beneath the salar crust, is placed in an evaporation pond, producing a concentrate from which can be extracted the coveted material lithium chloride.

Lithium is necessary for the ion batteries in smartphones, laptops and electric vehicles (EVs). The revolution of EVs has been prompted by an increasingly attractive market. Take Tesla, the leading EV manufacturer: the most recent 2017 Model 3 is able to cover 310 miles on a single charge at a starting price of $35,000. In comparison the Roadster model, which remained the only Tesla car in production until February 2012, could go 200 miles per charge for $110,000. Whereas 2,450 Roadsters were sold between 2008 and 2012, 64,551 models were delivered in 2016, 47,077 in the first half of 2017, and as Elon Musk stated on 28th July, an average of 1800 Model 3 Teslas are being reserved per day. Furthermore, the number of public charging stations has increased tenfold in the past four years.

2017 Global EV Outlook by International Energy Agency BEV (Battery electric vehicle), PHEV (Plug-in hybrid electric vehicle)

Bloomberg predicts that EV prices will equal those of petrol cars by 2025, and that EVs will account for a third of the global automobile market in 2040. Multinational manufacturing companies Volvo and BMW have recently boarded the EV train, announcing the end of the solely combustion engine-powered car and the release of the Mini Electric, respectively taking effect in 2019. Mercedes is currently investing $1bn in the production of its EVs in the US. This reflects both the necessity for competition against Tesla and the definite shift within the industry, from which nobody wishes to be left behind. Another key to the EV revolution is the change of air in a number of governments environmental policies. The French Minister for ecological transition Nicolas Hulot and his British counterpart Michael Gove have set 2040 as their objective to end the sale of diesel and petrol-powered cars. If China follows suit as Xin Guobin has suggested, the implications of an EV revolution would be stronger the country s automotive industry remains the largest in the world, and companies such as CATL and BYD contribute to its 55% global exportation of lithium ion batteries. The Financial Times suggests that China will dominate the battery market by 2025. In so doing, it would have the ability to persist with exportation, but also supply its own people with EVs. The altogether reduction of petrol-fuelled cars in China would blur its notoriety as the most pollutant country and so it would step up as the de facto leader in fighting climate change, a vital position left by the United States upon its exit of the Paris accord last June.

A spoonful of lithium chloride is needed for the ion battery in a mobile phone or laptop. However, for an EV, it ranges from 60 to 70 kilograms. The rapid growth of the EV market will undoubtedly boost the $1bn annual exportation of lithium, and the price of the metal itself. In light of the lithium boom, which will only sharpen over time, all eyes are turning towards the lithium triangle, which possesses 75% of global lithium reserves: Argentina, Bolivia and Chile. Yet Australia, whose extraction process is considerably less efficient, last year maintained its place as the number one exporter of lithium, with 14,300 metric tons. The problem appears to be the lack of a paradigm of lithium exploitation in these three nations. Indeed, each country has so far taken different political approaches in its handling the white gold. Latin Trade has described this divergence as related to the extent to which lithium is state-controlled. This reflects a spectrum that is continually seeing new colours, each approach distancing itself from one of the two extremes, ideology and pragmatism.

Bolivia has been lagging. With an estimate of 9 million tonnes, Salar de Uyuni is the largest known reserve of lithium in the world. In 2008, president Evo Morales launched an initiative to develop the extraction of lithium, a mineral he had nationalised in 2006, which combined with a 37.5% mining tax has since rendered the market in Bolivia unattractive to foreign companies. Morales must not only satisfy the vision of a socialist polity which he was elected for, but also the opinion of the indigenous people of Bolivia, who want partners, not owners . Bolivia lacks the technology and infrastructure to extract lithium on the scale of its southern neighbours, so must now decide whether it wishes to enter the race. La Paz must release some of its control in order to attract sufficient foreign investors, for Chile and Argentina have the resources to supply the lithium battery revolution, which before we know it, could have passed.

Chile has long been dominating mining exportation in South America, thanks to its copper industry. Copper provided for 20% of Chile s GDP and 60% of its exports in 2013, as stated by The Economist. Pinochet s 1981 Law on Mining Concessions, under which Jos Pi era declared a private presence as vital, had opened a door to freedom for foreign investors. Through time this created jobs for Chilean workers, promoted the economic growth of current key mining corporations such as Antofagasta PLC, and in turn, Chile acquired the necessary infrastructure for self-sufficiency. Reserves, climate and technology are all on Chile s side, but it is president Michelle Bachelet s 2016 considering lithium as a strategic mineral, and property of all Chileans which may cause the country to lose its pace.

Foreign interest has therefore turned to Argentina, who shows no such stagnation. Mauricio Macri has welcomed foreign investors in his lifting Cristina Kirchner s 2008 non-repatriation law and currency controls, thus bringing a new light to Argentina s foggy investment landscape. Albermarle Corporation and Eramet are among the 40 foreign companies who have taken interest in Argentina s flourishing industry, as stated by Bloomberg, who also estimates that the country will supply 45% of lithium globally in 2020. Pragmatic, business-minded Macri , as he is labelled by The Economist, is taking his chances to establish Argentina as the future lithium leader. His coalition s victory in the midterm elections on 22nd October has reinforced the changing rhythm of the Argentine economy.

The revolution is coming faster than expected. A diversification of the lithium triangle s exports is underway, and the competitiveness of these three countries could see itself enhanced. Disrupt of internal policy will only lessen economic growth, create a vacuum for multinationals to seize the benefits and leave a hopeful people fractured. The great economic powers could hold smaller nations within the palm of their hand, and this would be no illusion. Nothing grows in the salt flats, but there is a chance that South America may grow from them.