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Rush to the white gold

The lithium between modern-day scenarios and future prospectives

Lithium is an alkali metal, Li in the periodic table. Not as precious as gold, not as ductile as iron, nor conductive as copper. However, within the last twenty years, its value is increased thanks to the high demand for commercial use. Lithium is used to produce rechargeable batteries: the so-called lithium batteries.

An increase in the demand

Since 2015, in line with Paris Agreement on climate change that gave a boost to new green policies within the Western world, the demand of lithium is significantly increased. Taking into account data from the United States Geological Survey (USGS), with reference to 2015, the production is increased by 150%: from 38 tons extracted in 2016, to 100 tons in 2021. Both demand and prices increased.

Trading Economics – a private platform that highlights raw material’s costs to 200 States – states that the cost has stunningly grown. At the beginning of 2021, the price of lithium was about 45.000 yuan per ton, in March 2021it has reached 500.000 yuan per ton.

These data are just a part of the story: the supply chain of lithium, from production to consumer, involves a lot of actors, phases and money.

Extraction

First, we must consider the extraction. In nature, lithium is always combined with other 145 minerals. In particular, five types of rocks are plentiful of lithium: spodumene, lepidotite, petalite, ambligonite ed eucriptite. Spudomene is the most common rock where lithium comes from. There are two different processes for its extraction, depending on the raw material.

The second process is more complex: after extraction, rocks are heated up at 1.100 Celsius degrees, then are cooled down at 65 Celsius degrees. Then, rocks go through a long process that involves pulverization and toasting. Finally, lithium is mixed up with sulphuric acid; then sodium carbonate is added. To sum up: lithium is synthesized thought this complex process.

These processes, beyond being very long lasting and expensive, are also damaging to the enviroment. Marco Tedesco, a scientist at Columbia University, explains: “Within the process, some toxic materials may come out, pouring into the water supply network. This can happen also with hydrochloric acid and some radioactive materials”. According to Tedesco’s studies, about 2,000 liters of water are consumed for every kilo of lithium extracted. Moreover, due to their size, the pools used for the evaporation phase both cause soil consumption and contribute to air pollution, as they realize in the atmosphere toxic mists.

Oligopoly

Lithium extraction is a prerogative of a small number of countries, forming an oligopoly. In 2021, according to USGS, Australia and Chile have extracted about 81% of lithium. Other countries share the remaining 19%.

However, also considering the stocks, Bolivia would be the first State as it comes to materials that can be drowned out. USGS states that Bolivia may have 21 million tons available for extraction, against Chile’s 9.8 million and Australia’s 7.3 million. Taking into account stocks, the second richest country is Argentina, that owns about 19 million tons, despite its extractions stops at 6 tons per year.

Another factor must be considered. Those countries do form an oligopoly in terms of extraction, but also lithium refining must be taken into account. To say: some countries own the property of mines, some others have the money to lead the supply chain. When it comes to refining, China is the first country in the world. According to the report The Role of Critical Minerals in Clean Energy Transitions by International Energy Agency (IEA), Beijing refines about 50% of lithium worldwide, Chile 29%, Argentina 10%. Only 3% is left for the rest of the planet.

 

Lithium geopolitics

It is called The war of rare materials and China is already in pole position. The rush to lithium has an increasing relevance in world geopolitics. Going through energetic transformation, superpowers as Beijing and Washington are looking forward grabbing as much resources as possible. There is no lack of lithium, the aim is to establish influence in the areas where it can be extracted. Let’s start from data: the gold medalist for lithium extraction is Australia, followed by Chile, then we have China. According to the International Energy Agency, Beijing extracts 13%, but when it comes to refining the percentage get a boost and reach 58%.

Those numbers must be studied within the framework of an important Chinese strategic plan: “Made in China 2025”. The goal is to transform Beijing in the world leader State of renewable energy sources, focusing on electric vehicles, whose batteries are based on lithium. Nowadays, the American Panasonic holds the record in this sector, but it is challenged by Byd (Build Your Dreams) and by Calt (Contemporary Amperex Technology), both Chinese industries. Between 2000 and 2020, Beijing has multiplied by ten its investments in Africa, which is a strategic area for lithium extraction.

 In the future, thanks to energetic transformation that will be fundamental due to climate change, this kind of investments will increase. The World Bank expect the global demand of lithium to increase of 1000% by 2050: the diversification of energy sources will be a necessity, not a choice. Researchers predict that this paradigm may cause some dangerous dynamics: we could be at the begging of a new kind of colonialism, of economic sort. Hundreds of thousands of people work in Africa to extract rare materials, sometimes in unbearable conditions. Studies about an increase in neoplasm and in malformation among children must be carried out to seek a plausible relation between these diseases and the working conditions in mines.

Clean energy that is clean just for the developed countries. The Democratic Republic of Congo is a paradigm, as its soil is fundamental for China’s lithium extraction. DRC has a financial report of five billion, as a single Parisian municipality. Poverty, political instability and corruption lead to an unstable market, vulnerable to Beijing’s investments and money.

A supply chain of clean energy that is 100% led by China is a significant risk. This country may stop exports, pushing out many States from the process of energetic transformation, or forcing them to accept monopolistic prices. The absence of Unites States of America in the war of rare materials lead to a weak western world when it comes to clean energy, as it depends on an authoritative Country, whose market policies are unpredictable.

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