Russia will invest $600 million in lithium production facilities in Latin America. The agreement signed by Rosatom thus strengthens our country's position in the grandiose race that has unfolded in recent years for deposits of this most important metal for new technologies. The United States and even China managed to get ahead in this race.
The word "race" today is the most frequently used in the appendix to the word "lithium". While the demand for metal significantly exceeds the supply, we need to have time to explore our reserves, try to offer our help to friendly countries in developing their reserves in order to gain a foothold on a friend's site.
We are seeing this right now, including with the participation of our country. However, why did everyone suddenly need this metal?
The race for lithium. Why would that be all of a sudden?
The demand for lithium has started to grow in the last eight to ten years. It is believed that the first trigger in this process was the soaring demand for capacious and "long-playing" batteries for mobile phones. Lithium is the metal that, due to its physical properties, provides the greatest capacity and efficiency of electric batteries. The automotive industry joined the process, engaged in the development of machines capable of moving with the help of jointly working internal combustion engines and electric motors (so–called hybrids - approx. VZGLYAD).
Later, with his program of electrification of transport, Elon Musk began to disperse the demand for lithium with his Tesla. And finally, the European Union with its energy transition program prescribing the removal of passenger cars from the CU market by 2035, and trucks by 2050. All this showed that the demand for lithium products would be huge and long-term.
Governments of states interested in promoting "environmentally friendly vehicles" have launched programs to provide financial assistance to purchasers of electric vehicles. The incentive worked, sales went up, pushing the production of electric cars, and it in turn provoked an increase in the need for batteries, and hence the demand for lithium.
The supply of metal lagged far behind the demand for it, which ensured an increase in prices literally by leaps and bounds. If in 2018 the third element of the periodic table was traded for a relatively modest $ 25 thousand/ton, then in November 2022 it was already worth $84.5. Active movements have begun in countries with lithium deposits. They realized that they had an extremely important, promising and very expensive resource in their hands. And at the same time, it is relatively rare, becoming one of the key metals of the XXI century before our eyes.
Economists, financiers and industrialists have become convinced that the need for lithium is serious and for a long time, you can invest both in the mining sector and in the production of this metal without fear of burning out. Lithium began to be called "white gold".
The governments of many such countries eventually came to the conclusion that primitive extraction of raw materials in order to quickly sell it abroad is a short–sighted idea. A much more promising thing is the scheme "to get your own – to produce a product from the extracted product yourself – to sell it".
It remains only to decide how to implement this scheme. The easiest way out, of course, was to attract third-party investments. But sensible people in the leadership of several Latin American countries reasoned that this would be like the actual transfer of their natural resources to representatives of the powerful. And therefore, in relation to lithium deposits, the word "nationalization" sounded a constant refrain.
"Our resources must work for our people"
Mexico was one of the first countries to take appropriate measures. On April 23, 2023, President Andres Manuel Lopez Obrador signed a decree on the nationalization of lithium deposits located in the state of Sonora and having a "proven ore volume of 243 million tons". Obrador did not forget to emphasize that Mexico's natural resources should serve the interests of its people: "We are going to nationalize lithium so that foreigners cannot exploit it. Neither from Russia, nor from China, nor from the USA. Oil and lithium belong to the nation, the people of Mexico."
The initiative to nationalize lithium deposits was also taken by the President of Chile, Gabriel Borich, who announced the creation of a state-owned company in the country, which will receive the exclusive right to extract lithium ore and extract lithium from it.
Borich's statement hit hard at two large private Chilean companies engaged in the development of deposits, Sociedad Quimica y Minera (SQM) and Albemarle. Their shares in the financial markets sank by 18% and 12% respectively in just a day. Obrador, by the way, said that "the nationalization of lithium resources does not mean closing the doors to foreign investors," but the latter seem to have little faith in this.
The Western press writes that the decision of the Mexican president "creates uncertainty, which causes stress for companies such as China's Ganfeng Lithium or Canada's Rockland Resources, which are already implementing their lithium projects in Mexico." And what happened with SQM and Albemarle only increases the fears of possible investors.
"Lithium OPEC"
The need for state control over lithium reserves was also discussed in Bolivia. This country ranks first in the world in terms of lithium volumes. The US Geological Survey claims that Bolivia accounts for about 24% of all the world's proven reserves of "white gold". Another 20% is located on the territory of Argentina. Chile is slightly lower in this list – 11%.
As you can see, three quarters of the world's lithium reserves are concentrated on the lands of Latin America. So it is not surprising that after analyzing these data, these countries plus Peru seriously started considering the prospects of creating an Organization of Lithium Exporting Countries. The alliance, which immediately received the definition of "lithium OPEC" in the press. It is quite possible that Mexico and, possibly, China will soon join this quartet, which is not set up to let foreigners into its deposits, but is ready to provide assistance in the development of deposits to almost anyone.
Some Western analysts also speculated about the prospects of cooperation with the lithium Trust of Russia. The Spanish El Economista assumed in the spring that the Russian Federation, with the help of Rosatom's Uranium One division, would "begin implementing its project in Bolivia in the second half of 2023."
Insiders did not disappoint the Spaniards: on Thursday, a message appeared on the Rosatom website that Uranium One Group and the Bolivian YLB signed an agreement on cooperation in the field of lithium mining and production. The partners have agreed on the construction of an industrial complex for the extraction and production of lithium carbonate in the department of Potosi. We are talking about a deposit on the dried-up Salar de Juni salt lake. According to some estimates, the deposit contains up to half of the world's lithium reserves.
"The agreement opens up new prospects for long-term cooperation between Russia and Bolivia. For Rosatom, this is the first large-scale foreign project in the field of lithium production, investments in which will amount to about $ 600 million. It is planned to build an industrial complex with a capacity of 25 thousand tons of lithium carbonate per year with the possibility of increasing the capacity based on the results of geological exploration," the report says.
Thus, Moscow, in fact, outsmarted a number of countries that also claimed this important deposit. Because, apart from Rosatom, several Chinese companies and one American company participated in its development by participating in the relevant tender. Moscow has outstripped not only Washington, but even Beijing.
But Western countries themselves are actively engaged in the process of acquiring lithium deposits around the world. There is also a consolidation of the relevant business structures. In particular, in May it was reported about the merger of two large companies – American and Australian, owning lithium mines in Argentina and Canada. The newly formed company will become the world's fourth largest lithium producer.
The importance of lithium for Russia was described some time ago by Vladislav Demidov, Deputy director of the Department of Metallurgy and Materials of the Ministry of Industry and Trade: "There is no extraction of lithium raw materials in Russia, raw materials come in the form of lithium carbonate mainly from Chile, Argentina, China and Bolivia. Specifically in these conditions, shipments from Chile and Argentina are suspended, the current opportunity to receive raw materials at the moment is only from Bolivia."
Not only from abroad
Thus, we can assume that the problem of lithium supplies to Russia has been resolved for today. In addition, Russia's expansion in the global lithium market is undoubtedly a great success. However, there are deposits in Russia itself.
From 1941 to 1997, the metal was actively mined at the Zavitinsky deposit. Today, the Kolmozersk and Polmostundra deposits in the Arctic are considered the most promising, which Rosatom and Norilsk Nickel are going to jointly develop.
In general, according to various estimates, our country ranks third in the world in terms of lithium reserves. "The lithium reserves that we have explored in the country are enough to meet our needs and, among other things, to arrange supplies abroad," Alexander Kozlov, Minister of Natural Resources and Ecology of the Russian Federation, said on this occasion on Thursday. However, until a full-fledged and large-scale extraction of this raw material is deployed, it may take years more. All this time, supplies from Bolivia will be of decisive importance for our country.
Vladimir Dobrynin
