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The thing about lithium is that it still isn't as big or valuable of a market as some headlines might make you believe. Chile exports, per the graph, about $900

by scythe 3y ago

The thing about lithium is that it still isn't as big or valuable of a market as some headlines might make you believe. Chile exports, per the graph, about $900M worth of lithium per annum. For comparison, they also export about $33B worth of copper. And about $2B of wine. Pretty decent wine, I might add. So it's not such a surprise that Chile is taking a very slow approach with this "nationalization". Mining doesn't usually grow at the speed of software. Plus, competition will arise. The quantity of known lithium resources globally doubled from 2014–21: https://bibliotekanauki.pl/articles/2090756.pdf https://bibliotekanauki.pl/articles/2090756.pdf To some extent, nationalizing lithium is as much a publicity stunt as it is an economic policy.

dandy23 3y ago
And don't forget that those $900M are based on a very high lithium price. It has dropped since and very likely will drop more.
- npsomaratna 3y ago
  What if they move up the value chain though, rather than simply exporting the lithium?
  - aeyes 3y ago
    They are trying: https://www.reuters.com/business/autos-transportation/china-ev-maker-byd-build-290-mln-battery-component-plant-chile-2023-04-21/ https://www.reuters.com/business/autos-transportation/china-...
vlovich123 3y ago
You’re talking about the lithium itself. Chile specifically is taking steps to go upstream to capture more of the value as well so that 0.9B number would be severely undercounting.
- scythe 3y ago
  Chile would certainly benefit from having more battery manufacturing in its economy. They've recently joined the short list of countries where solar power is more than 10% of consumption — growing fast — and they still generate and consume much less total electricity than a typical developed country. This implies that they're going to end up with a very large solar fraction, and a need for stabilization. But you can't just make a battery out of lithium. You also need graphite and either nickel or iron phosphate. And you need some fine chemicals (the electrolyte). The good news is that Chile does produce some iron and phosphorus. But I don't think they currently produce much in the way of graphite or organic chemicals. I'm not sure, either, if they can process their iron and phosphorus ore into battery-grade iron phosphate. So it's not just "refining lithium". Lithium carbonate of commerce is already pretty pure. This isn't petroleum we're talking about. The danger is trying too hard to achieve autarky. The CPTPP (of which Chile is a member) at least in theory does have existing sources for those other components. But it seems like the Boric administration is skeptical of cooperation. Environmentalists are another potential barrier, since anything involving chemical engineering tends to get them riled up, justified or otherwise. By the way, I think you mean "downstream" when you say "upstream". Mines are generally the proverbial headwaters.
  - bagacrap 3y ago
    The one time I visited Chile, the city air was thick with smoke from wood-burning fireplaces. At least at that point in the past, the total amount of electricity consumed would not accurately have reflected the total amount of energy consumed or its environmental impact.
    - scythe 3y ago
      That's an interesting observation. I think it reinforces the point that the prevalence of solar on a near future Chilean grid could demand a lot of storage.
    - joseda-hg 3y ago
      Ah, I see you've been to the South It's way too cost efective for the majority of people to consider anything else

by scythe 3y ago

dandy23 3y ago

And don't forget that those $900M are based on a very high lithium price. It has dropped since and very likely will drop more.

npsomaratna 3y ago
What if they move up the value chain though, rather than simply exporting the lithium?
- aeyes 3y ago
  They are trying: https://www.reuters.com/business/autos-transportation/china-ev-maker-byd-build-290-mln-battery-component-plant-chile-2023-04-21/ https://www.reuters.com/business/autos-transportation/china-...

vlovich123 3y ago

You’re talking about the lithium itself. Chile specifically is taking steps to go upstream to capture more of the value as well so that 0.9B number would be severely undercounting.

scythe 3y ago
Chile would certainly benefit from having more battery manufacturing in its economy. They've recently joined the short list of countries where solar power is more than 10% of consumption — growing fast — and they still generate and consume much less total electricity than a typical developed country. This implies that they're going to end up with a very large solar fraction, and a need for stabilization. But you can't just make a battery out of lithium. You also need graphite and either nickel or iron phosphate. And you need some fine chemicals (the electrolyte). The good news is that Chile does produce some iron and phosphorus. But I don't think they currently produce much in the way of graphite or organic chemicals. I'm not sure, either, if they can process their iron and phosphorus ore into battery-grade iron phosphate. So it's not just "refining lithium". Lithium carbonate of commerce is already pretty pure. This isn't petroleum we're talking about. The danger is trying too hard to achieve autarky. The CPTPP (of which Chile is a member) at least in theory does have existing sources for those other components. But it seems like the Boric administration is skeptical of cooperation. Environmentalists are another potential barrier, since anything involving chemical engineering tends to get them riled up, justified or otherwise. By the way, I think you mean "downstream" when you say "upstream". Mines are generally the proverbial headwaters.
- bagacrap 3y ago
  The one time I visited Chile, the city air was thick with smoke from wood-burning fireplaces. At least at that point in the past, the total amount of electricity consumed would not accurately have reflected the total amount of energy consumed or its environmental impact.
  - scythe 3y ago
    That's an interesting observation. I think it reinforces the point that the prevalence of solar on a near future Chilean grid could demand a lot of storage.
  - joseda-hg 3y ago
    Ah, I see you've been to the South It's way too cost efective for the majority of people to consider anything else