Sitting on lithium treasure: Struggle to turn rich reserves into global power

Proceeding from a new article, Jason Deegan unveils that lithium, often referred to as the “white gold” of the energy transition, is an essential element for the global shift toward greener power.

From powering electric vehicles (EVs) to storing solar energy, lithium plays a critical role in the world’s sustainable future. However, having vast reserves of lithium is not enough; extracting and refining it into a usable form is a far more complex challenge, something that countries with rich lithium deposits are discovering firsthand.

For nations like Mexico, which have nationalized their lithium resources, the plan seemed simple: retain the profits from this burgeoning industry, develop local infrastructure, and capitalize on the growing demand driven by US clean energy incentives. However, in practice, the plan has hit roadblocks. Private companies are hesitant to invest in a state-run system, especially one that involves profit-sharing and regulatory complexities. As a result, lithium extraction has barely progressed.

The real value of lithium lies not just in extraction, but in transforming it into battery-grade material—a process that requires significant infrastructure, investment, and expertise. Without these elements, lithium remains largely untapped and unrefined.

Chile, another major lithium-producing country, is also grappling with similar challenges. The Chilean government’s push for majority state ownership in new lithium ventures has sparked concern among investors, as highlighted by Robert Friedland, CEO of Ivanhoe Mines: “Money is a coward. It flees at the first sign of trouble.” This uncertainty, coupled with long lead times for production, has led to delays in fully utilizing the nation’s lithium reserves.

As global demand surges, especially from China and Europe, the world’s need for lithium is urgent. Yet, much of the available lithium remains underground, untapped due to unstable investment conditions. With projections of a potential 22 per cent supply shortfall by 2030, the race to secure this vital resource has never been more competitive.

By Naila Huseynova