I. New strategic uses of lithium and higher global demand
In addition to its traditional uses in the production of lubricating greases, glass, and ceramics, among other products, lithium has become a key raw material for the energy sector due to its unique physicochemical properties. The use of lithium in the following areas has opened significant opportunities for the lithium mining industry:
- Energy storage through its use in electric batteries and solar accumulators.
- Contribution to energy efficiency through its use in lightweight and resistant alloys for airplanes, ships, and automotive vehicles, such as aluminum-lithium alloys.
- Its use as a key component in the production of tritium, a fuel used in nuclear fusion.
The use of lithium in batteries is the main driver of the current high demand. This trend is set to continue as the use of fossil fuels is phased out in urban transport, particularly due to increased production of electric vehicles, and the need to store the power generated by non-conventional renewable energies (solar and wind).
Growing demand for lithium and the challenges experienced in increasing global supply have driven increases in the price of this mineral in recent years. In this scenario, many lithium mining projects are being developed in Australia, Argentina, and Chinas to increase global supply. However, it isn’t clear whether this increased supply will be sufficient to meet growth in demand. As such, although the price of lithium is not expected to continue increasing at the same rate as it has in recent years, it will continue to reflect the strategic value of this mineral.
The high demand and increase in price of lithium generates incentives for technological change. Progress has been made on studying other active elements for battery production such as sodium- sulfur batteries. However, the most likely scenario is that lithium batteries will continue to lead the market in the coming decades. Similarly, energy vectors such as green hydrogen are not expected to constitute a threat to electric energy storage through batteries, but rather will act as complementary technologies.
II. Abundant reserves
Chile has one of the world’s largest lithium reserves, accounting for approximately 40% of the estimated global total. These reserves are in Chile’s salt flats in the form of brine, together with other valuable minerals such as potassium, sodium, manganesium, boron, sulfates, and chlorides. In a study conducted in 2013, the National Geology and Mining Service (Sernageomin) found that Chile has exceptional geological potential for lithium mining: 63 saline environments (45 salt flats and 18 salt lakes) with diverse physicochemical and hydrogeological characteristics, located in coastal areas, interior regions between the Chilean Coastal Range and the Andes Mountains close to nitrate fields, and in Andean regions and high planes more than 3,000 meters above sea level.
Chile’s largest lithium reserve, accounting for more than 90% of the country’s total lithium deposits, is in the Atacama Salt Flat. This area offers the best conditions for lithium mining globally, due to its high concentration (approx. 2,000 ppm), the absence of contaminants, the high evaporation rate due to high solar radiation, low levels of rainfall, and aridity. As such, the Atacama Salt Flat offers ideal conditions for low-cost and efficient
lithium mining operations.
Additionally, the study conducted by Sernageomin found that there are 18 other salt flats located in Chile’s Antofagasta and Atacama regions that may be of interest to assess their geological potential for future lithium mining projects. In these cases, detailed exploration is required to increase knowledge of these areas.
III. Development of new extraction technologies:
New requirements for the lithium mining industry, especially sustainability and environmental responsibility standards, constitute a unique opportunity for the country. The increase in global demand requires an expansion in lithium mining capacity, but this cannot continue
for much longer with the current brine evaporation technology used, because the environmental impact.
Chile’s position as a leading global lithium producer opens opportunities to make progress on upstream technological development with new extraction techniques (such as direct lithium extraction with brine reinjection, or DLE/R), which ensure the lowest possible social and environmental impact. These technologies are being developed and tested in various operations but have yet to be fully implemented on an industrial scale. Promoting such technologies is important for ensuring environmentally sustainable production. As such, their implementation in existing lithium mining operations and new projects should be an obligatory requirement.
These technologies not only open up opportunities in Chile for lithium mining innovation and technological development, but also give rise to the possibility of increasing current production levels while minimizing the impact on the environment. To achieve this, baselines must be established for Chile’s salt flats, together with rigorous monitoring of the effects of implementing these technologies, in particular in relation to the
biogeochemical composition of the brine reinjection.
In this development, the State—which has exclusive rights over lithium in Chile—can play a role not only in terms of environmental regulations and requirements, but also in terms of developing and pilot testing technologies and generating baselines (for example, hydrogeological models) which enable the performance of these new extraction techniques to be properly assessed.
IV. Generation of a scientific-technological-industrial ecosystem
In addition to the above, opportunities in the development of knowledge and technology, together with the advancement of supply chains and added value associated with this industry, will enable the generation of a scientific-technological-industrial ecosystem. In principle, this ecosystem will be made up of lithium mining companies, academia, and both public and private science and technology institutes. The State will play a key role both in terms of financing and, in particular, generating public knowledge; early support for the development of technologies, innovations, and new ventures; and focusing research and development on the solution of industrial, environmental, and/or social challenges. For example, the absence of knowledge on microbiological ecosystems and their potential for innovation give rise to the opportunity for scientific discoveries based on saline ecosystems that may form a basis for future technological developments.
V. Development of supply chains and added value
In economic terms, lithium constitutes not only an opportunity to fairly generate public revenue streams through royalties and taxes, but also an opportunity to make progress on industrial development and technological innovation that will enable Chile to consolidate its position as a leading global lithium producer.
The development of Chile’s lithium industry must be seen as an opportunity to generate diverse goods and services supply chains that will promote the development of technologies and innovation (upstream or downstream), and other value-added activities in the supply chain, including sophisticated business operations and/or scientific activities. For example, the battery industry value chain may be developed through the production of cathode, anode, electrolyte metallic lithium and other materials in Chile. The positive results of Chilean economic development agency Corfo’s call to use part of the reserved quotas for value-added projects (awarded to private-sector Chinese company BYD) demonstrate that it is possible to develop the lithium value chain in Chile through a profitable business venture.
Major multinational companies in the battery manufacturing and electromobility sectors require a reliable long-term supply of lithium. This supply can be provided by the Chilean State through public-private partnerships with these companies for them to establish operations in Chile and collaborate in the development of the country’s scientific-technological and industrial ecosystem.
These high-value-added supply chain opportunities or business activities may be developed in the areas where lithium mining operations are conducted, thus generating new opportunities for local development, productive employment, and infrastructure, in addition to the benefits provided by the investments themselves for local communities. Corfo’s contracts with SQM and Albemarle reserve a portion of lithium production for sale at preferential prices to companies that establish operations in Chile inorder to develop added-value projects in the lithium value chain.
Source: Oferta y demanda de litio hacia 2030. Cochilco. 2020
Corfo’s contracts with SQM and Albemarle reserve a portion of lithium productionfor sale at preferential prices to companies that establish operations in Chile in order to develop added-value projects in the lithium value chain.