A vehicle in one of Chile’s salt flats. Creator: Diego Delso. Copyright: CC-BY-SA 4.0.
Amidst the shimmering, ecologically diverse salt flats spanning Bolivia, Chile, and Argentina, a delicate balance has long existed between nature’s pristine beauty and human habitation.
But in recent years, the global surge for lithium is transforming landscapes across these Andean wetlands, known as the “Lithium Triangle.” Lithium, powering electric cars and batteries, plays an essential role in the global green energy transition. At the same time, the pursuit of “white gold” comes with significant environmental and social costs.
The “Lithium Triangle,” home to around 54 percent of the world’s lithium resources, is one of the driest places on Earth. Mining operations, including drilling holes in the salt flats and converting lithium into commercial forms, consume vast quantities of water. All this will exacerbate existing water scarcity issues and threaten the species and communities that live around these fragile ecosystems.
Socio-environmental organizations from Bolivia, Chile, and Argentina formed an alliance in 2023, before the 28th United Nations Climate Change Conference (COP28), to promote the protection and conservation of these ecosystems, as well as water, biodiversity, and the ways of life of the Indigenous and rural communities that depend on them.
A map of the Lithium Triangle on the “Arid diagonal”. The triangle is observed as a contiguous area in northern Chile, northeastern Argentina, and southwest Bolivia. Source: Own work. Author: Mamayuco.
China’s role in developing South America’s lithium industry
Meanwhile, the rising global demand for lithium has prompted the three South American countries to explore strategies to industrialize their lithium production.
China, the world’s largest producer of electric vehicles and the largest consumer of lithium globally, has, so far, shown its willingness and ability to collaborate with the Andean countries in building local lithium processing facilities.
Since 2019, Chinese companies, including state-owned companies Citic Guoan (中信集团) and the world’s largest battery maker for electric vehicles, CATL (宁德时代), have signed deals with the Bolivian state-owned company Yacimientos de Litio Bolivianos (YLB), committing to build industrial facilities for the production of lithium carbonate in Bolivia, which holds one of the world’s largest lithium reserves.
Salar de Uyuni, the world’s largest salt flat, located in southwest Bolivia. Image via UN photo. CC BY-NC-ND 2.0
Under Bolivian law, any extraction of lithium in Bolivia must be conducted by YLB or through agreements where YLB holds a majority share in a joint venture. This requirement has caused hesitation among private international investors. China is now ahead in the race.
“Multiple Chinese state-owned enterprises were willing to take up that challenge, even though it means slower profits and a longer-term commitment,” Rebecca Ray, Senior Academic Researcher at Boston University’s Global China Initiative, said in an online interview with Global Voices. “Chinese investors have been patient and just kind of rolled with whatever the needs are.”
In Chile, President Gabriel Boric said on April 21, 2023, that he would nationalize the country’s lithium industry. On the same day, the leading Chinese electric car maker BYD (比亚迪) agreed to invest USD 290 million to build a lithium cathode battery production factory in Chile. Chinese state-owned company Zijin (紫金矿业) is also in talks with Argentina’s state-run firm YPF Sociedad Anónima (YPF) to establish a lithium battery cathode plant in Catamarca province.
Experts point out that Chinese state-owned companies, which have received green finance and loans from the country’s policy banks, are better positioned to “patiently” engage in the industrialization of the lithium industry alongside South American nations. Meanwhile, private foreign companies might hesitate due to uncertainty about when they would achieve a return on their investment.
China’s new green guidelines
To go green in South America’s “Lithium Triangle,” the most effective approach is likely to improve regulatory oversight from the top.
In 2021, Chinese President Xi Jinping announced China would “step up support for other developing countries in developing green and low-carbon energies (中国将大力支持发展中国家能源绿色低碳发展).” Following that, China pushed financial institutions and markets to prioritize green development and on June 1, 2022, the China Banking and Insurance Regulatory Commission (CBIRC) issued a set of “Green Finance Guidelines.”
“It’s a hopeful moment,” said Ray. She reiterated that these new Guidelines indicate a significant shift, as Chinese investors would probably start to directly engage with local communities, despite their limited history of such engagement.
At the end of 2023, the balance of China’s green loans in local and foreign currencies stood at 30.08 trillion yuan (about USD 4.23 trillion), up 36.5 percent from 2022, according to the country’s central bank. In President Xi’s 2024 New Year’s address, he highlighted the country’s achievements in this area.
新能源汽车、锂电池、光伏产品给中国制造增添了新亮色。中国以自强不息的精神奋力攀登，到处都是日新月异的创造.
New energy vehicles, lithium batteries, and photovoltaic products are a new testimony to China’s manufacturing prowess. Everywhere across our country, new heights are being scaled with dogged determination, and new creations and innovations are emerging every day.
This move can also be viewed as a practical initiative to mitigate risks caused by social and environmental concerns, as Chinese overseas projects have previously encountered obstacles due to conflicts with local community interests. Despite that, this development offers a glimmer of hope.
For positive changes to occur, progress must be made on both sides. Ray said the challenge is that the host governments haven’t yet figured out their development strategies. On one hand, the development of the lithium industry is still relatively new; on the other hand, implementing standards for environmental sustainability could impact their immediate profits or even lead to conflict.
Local backlash
The three host governments, which all signed the Escazú Agreement, still largely follow broad principles rather than detailed directives concerning their mining strategies. The Agreement is a landmark regional treaty aimed at promoting transparency, public participation, and access to justice in environmental matters across the region. But so far, local residents near the Lithium Triangle have very little access to information regarding how new projects would affect their communities and have nearly zero participation in environmental decision-making processes.
In Bolivia, the government launched an international call earlier this year for companies who were interested in building facilities for lithium carbonate production in seven of the country’s salt flats. Among the 21 companies qualified for Phase III are enterprises from China, Russia, and the United States. Environmental activists and community leaders argued that the state-owned YLB didn’t conduct prior consultation with the affected communities ahead of the bidding process.
“Right now, everything is handled secretly, “ Yamile Cruz, executive secretary at Bolivia’s Regional Federation of Workers and Peasants of the Southern Altiplano (FRUTCAS) told Mongabay. “We have to think about future generations, about the future of our children — because water is life. But as long as there isn’t that information, as long as we don’t have specific studies, everything is uncertain.”
Similar cases also unfolded in Chile. In January, hundreds of protesters blocked access to the Atacama salt flat, the world’s largest lithium deposit, demanding the government include Indigenous communities in negotiations before signing an agreement that would directly affect them. In May, Chinese electric car maker BYD announced the postponement of plans to build a lithium cathode battery production factory in the country. The Chief of BYD America, Stella Li, told Reuters there was “a lot of uncertainty” around the project.
A more encouraging case was seen in Argentina. In March, the Supreme Court of Justice in Catamarca granted an injunction filed by an Indigenous community leader, halting future mining activities in the Salar del Hombre Muerto, one of the largest lithium basins in the region. The decision suspended new project development and required companies to submit “cumulative and comprehensive” environmental impact reports. Concerns arose after previous lithium projects almost dried up the floodplain of the Trapiche River, a major source of water for the community.
“They are sucking up all the water. They intended to pump 380,000 liters per hour through an aqueduct. This would cause enormous damage. The rivers will dry up and there are areas where the water will no longer reach. Who will take care of that?” Román Guitián, the community leader told El Pais. He has fought for this case since 2018.
Previously, Argentina adopted international standards to ensure that Indigenous communities “shall wherever possible participate in the benefits of such activities, and shall receive fair compensation for any damages which they may sustain as a result of such activities.” However, the country has not yet introduced specific regulations for investors to meet those standards.
The three Andean countries are navigating a delicate balance between developing local lithium industries and caring for the environment. The specifics of how they will work with China under the new Guidelines remain unclear. However, the Guidelines show China is considering environmental implications in overseas projects, which is crucial for mitigating risks and advancing its objective of creating a Green Belt and Road Initiative.
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Publish date : 2024-07-30 18:28:00
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