Horizons and Obstacles for the Creation of a Lithium "OPEC"
The obtainment and export of lithium have recently become topics of political and media discussion, and they are gradually gaining attention on the international agenda and in negotiations between regional blocs. Among the initiatives being discussed to coordinate policies among lithium-exporting countries and reduce their vulnerability with regards to other competitors and fluctuations in the international economy is the so-called Lithium OPEC. The idea would be to emulate the organization of oil-exporting countries in a kind of cartelization of lithium-exporting countries, resulting in a "OLEC” (Organization of Lithium Exporting Countries). Beyond its practical viability, this concept serves as a generative metaphor that allows for discussions and opens options for the integration and regulation of a resource that is increasing in value and demand but is not being fully exploited by the countries that possess it in the region.
South America is home to the Lithium Triangle, which includes Argentina, Bolivia, and Chile, countries that have more than 60 percent of the world's lithium reserves. This has yet to translate into large export volumes, with Australia and China being the main actors. Currently, only Chile has a well-established profile and export volume as a lithium-exporting country (145,000 tons exported in 2022, compared to 37,000 by Argentina and 480 by Bolivia). High demand and the sudden increase in current prices are fueling the so-called "lithium fever," along with that of other minerals which are rare or critical for the energy transition and for use in technological devices. However, this favorable situation may not be sustainable in the medium term because substitutes for the resource could emerge, and its extraction through evaporation generates significant environmental liabilities and is largely opposed by local communities around the high Andean wetlands, (as evident in recent months in Jujuy.)
Reference to the Lithium Triangle may suggest a degree of homogeneity and coordination among the three member countries. However, differences in legislation, resource definition, production models, and capacities for valuation and export could not be more pronounced. In Argentina, for example, the 1994 Constitution grants ownership of the subsoil to the provinces. Thus, the possibility of producing batteries depends on an interesting and costly mechanism: the Argentine state-owned company Y-Tec (YPF-Tecnología) must first purchase the mineral belonging to its own country from the American company Livent, which obtains it from the Salar del Hombre Muerto in the high plateaus (Puna) of Catamarca
Given these conditions and in order to reduce the vulnerability of each country and subnational territory in the face of external investors and powers, various attempts at regional coordination have been made. Within Argentina, the Lithium Roundtable brings together representatives of the National Government and the Provincial Governments of Jujuy, Salta, and Catamarca. In 2022, the Latin American Lithium Chamber (Calbamérica) was established, bringing together SMEs and experts advocating for transparent pricing of the mineral. Among governments with greater ideological affinity, contacts between embassies and foreign ministries have also increased. These initiatives give rise to the alternative idea of a Lithium OPEC/OLEC, which implies some degree of cartelization with the aim of influencing international price control. However, several experts argue that this goal seems too ambitious because the countries in the Lithium Triangle are not yet major exporters, except for Chile. In this sense, it would be important to try to involve other countries in the Global South, such as Zimbabwe or Kazakhstan, or from our own region, like Mexico and Brazil, which do not have comparable reserve volumes but are significant exporters, and in the case of the former, have advanced State control due to lithium’s designation as a strategic resource. Cartelization is unlikely to succeed without the participation of China and Australia, but given that China is both the largest producer and consumer, it is unlikely to agree to an increased market price. Australia, currently the largest producer, also relies heavily on China as its primary market.
Resistance to a Lithium OPEC/OLEC is not only geopolitical or about securing market share but also exists within the countries themselves. It is not surprising that large foreign companies and foreign powers oppose any cartelization, citing arguments of free competition and the free movement of investments. More strikingly, the Argentine provinces are among the main opponents to any "surrender" of sovereignty. This can be seen in statements from Raúl Jalil, the governor of Catamarca, at the Arminera Fair last May: "We are against what the OPEC/OLEC represents. Today, we have lithium, and also copper. If we work responsibly, we will contribute to reducing inflation and creating jobs." To this, Gerardo Morales, the governor of Jujuy, adds, "Chile is stepping back. Bolivia is stepping back too. We must move forward on the path of Free Trade Agreements. I don't like the idea of a Lithium Triangle." Such staunch opposition has led the Argentine Foreign Ministry to stop promoting this initiative.
Beyond these structural obstacles and resistance from relevant actors, I believe that the main problem with the idea of a Lithium OLEC is its narrow focus on lithium as an exportable resource within a strictly commercial policy. With this emphasis, it overlooks the fundamental dispute over lithium, which is not primarily about final prices or obtaining higher royalties but about the participation of regional countries in the value-added aspect of the resource through the production of batteries. Unfortunately, the margins for this are limited. On one hand, the private sector and central countries have a decisive influence on investments, severely limiting the autonomy on the countries. On the other hand, as previously mentioned, regulatory and value-based differences, as well as those based on capacity, make consistent resource management among the three countries difficult. In this sense, rather than insisting on a commercially focused regional cartelization, it is more promising, albeit challenging, to actively explore production partnerships with potential neighboring partners such as Brazil and Mexico. These countries have lower lithium reserves but possess robust automotive industries that can facilitate progress toward an energy transition with higher levels of fairness, autonomy, and environmental safeguards.
Alejandro Pelfini is the Director of Postgraduate Studies at the School of Social Sciences, University of Salvador. He is also an associate researcher at the Program for Global Studies, FLACSO-Argentina.