The foreign lobby on the lookout for Chilean lithium

We replicate the journalistic article published by the newspaper El Ciudadano together with Fundación Tantí: «The foreign lobby on the lookout for Chilean lithium»

Analysts point out that lobbying has increased due to Chile’s positioning as a player that wants to grow in the lithium market. However, they warn that our country must be careful of the potential effects of the pressure for the demand for «white gold» exerted by industrialized countries.

By Yasna Mussa

Last Monday, March 20, the European Council adopted the regulation to establish a framework to guarantee a secure and sustainable supply of critical raw materials, known as the Critical Raw Materials Act (CRMA). This is the last step in the decision-making procedure. Previously, in December 2023, the first part of the document had been approved, which identifies two lists of materials (34 critical and 17 strategic) crucial for the green and digital transitions, as well as for the space and defense industries. Lithium and copper were identified as strategic.

The CRMA sets three benchmarks for annual raw material consumption in the EU: 10 percent local extraction, 40 percent processed in the EU, and 25 percent from recycled materials. Outside of the 10 percent that would be obtained within the European Union’s countries, the rest will be extracted in the territory of its partner countries, with environmental, social, and cultural impacts depending on each counterpart’s local reality.

The rapprochement with Chile began much earlier. Smiling and posing in front of the camera, representatives of the European Union and the Chilean government signed an agreement in July 2023 to obtain lithium and copper in exchange for economic investments.

The Chilean delegation, headed by President Gabriel Boric, took advantage of his European to meet with the European Commissioner for Internal Market and Services, Thierry Breton, and the Minister of Foreign Affairs of Chile, Alberto van Klaveren, to sign in Brussels, Belgium, a memorandum for «Strategic Partnership on Sustainable Raw Materials Value Chains.»

This provided the starting point for acquiring critical materials such as lithium and copper from Chile to supply the electromobility market. In exchange, the bloc would establish its industry and value chains and create jobs in this South American country.

Chile’s president, Gabriel Boric, used his X account to comment on the meeting, which also included the president of the European Commission, Ursula von der Leyen.

«Together with the European Union, we aim to move towards a more productive, sustainable, and inclusive development. Today, we signed an agreement to promote the sustainable development of raw materials and advance more capital, added value, and technology development,» the president wrote.

Von der Leyen reinforced the idea by assuring that among the countries, «we have kindred ideas, we share the same values, and we are chosen partners to become key global players in clean energy and the digital transition.»

The operation was the key to «the progress of clean energy and the digital transition, in addition to extending the industry’s competitiveness, creating quality jobs and sustainable economic growth for the benefit of both partners.»

This memorandum is part of the EU’s Global Gateway investment strategy and the Critical Raw Materials Law, which aims to develop cooperation in the value chains of these sustainable raw materials, lithium, and copper, in the mining sector. These materials are indicated as crucial for the progress of clean energy transition.

This agreement with the European Union promises to benefit by obtaining strategic critical raw materials for the ecological transition. This will help the EU to not solely depend on countries like China while ensuring that Chile will benefit from new European investments to boost its economy. However, it is this South American country that could put its ecosystems at risk, and where this extractive activity would directly impact its communities and habitat to develop solutions promoted as ecological, but that have not yet been consulted in detail with the local populations.

The European lobby

«There has been an increase in lobbying that is to be expected because Chile has positioned itself as a player that wants to grow in the lithium market, which has manifested itself differently. On the other hand, there is pressure from demand from industrialized countries, which, of course, welcome lithium extraction in Chile,» says Ezio Costa, executive director of the NGO Fima. The lawyer points out that we must not lose sight that it is also a geopolitical issue in which there is a dispute at all levels between the governments and industries of the United States, Europe, and China, as well as the Russians, to a lesser extent. «In the Chilean case, they want access to these materials that are, as they have declared, critical for the new form of production that they want to push towards carbon neutrality.»

In addition, Costa points out that Chile has the challenge of generating its own industrial policies in a world «in which the neutrality that previously existed in international markets no longer exists. And secondly, it has to be careful about the effects that this pressure that industrialized countries are exerting may have.»

But this is not the only approach or interest from Europe. French companies had already begun to move their pieces, although quite cautiously. Last June, the French company Eramet announced that it had just opened an office in the country to promote the development of lithium production in South America and thus supply battery manufacturers.

The office will focus mainly on business development and exploration, with its primary function being «supporting future technical and commercial operations,» and has a $800 million USD budget to invest in lithium in Chile. In this way, Eramet, already installed in the region, would begin its lithium production in 2024 in association with the Chinese steel group Tsingshan. Eramet is also interested in studying other potentially lithium-rich sites on the continent, including Chile.

Chinese behavior has been quite the opposite. It is known that the Asian giant settled openly in Bolivia and Argentina. Lithium deposits, mainly in the Lithium Triangle, where one of the largest lithium reserves in the world is concentrated, have generated significant interest as electric vehicle battery manufacturers seek to secure supply chains. For this reason, the European Union considers the issue of raw materials to be a key piece in the talks on a trade agreement with The Southern Common Market (commonly known by the Spanish abbreviation Mercosur).

During her participation in the Raw Materials Convention between the European Union and Latin America in 2023 in Argentina, Chile’s Minister of Mining, Marcela Hernando, highlighted the country’s advantageous position for the development of electromobility due to its large reserves of copper and lithium.

«Chilean copper and lithium mining are fundamental for the progress towards electromobility and the future of our country… to promote an industry that offers the world raw materials with a low carbon footprint and contribute to the fight against the climate crisis,» says Hernando.

However, it is not the only strategic announcement that foreign companies have achieved: SQM announced a long-term strategic agreement with the Ford Motor Company to ensure the supply of raw materials for the production of electric vehicles. The Chilean company reported that «the agreement between Ford and SQM will guarantee the supply of battery-grade lithium carbonate and lithium hydroxide, essential components for the manufacture of high-performance batteries for electric vehicles.»

SQM added that the lithium provided for the US company «will help support its plans to produce electric vehicles and expand its presence in global electromobility markets.» Since the raw material extracted in Chile «should help Ford vehicles qualify for the United States Inflation Reduction Act (IRA) consumer tax credit.»

«We value Ford’s confidence in SQM’s ability to deliver sustainably produced battery-grade lithium products in Chile,» said SQM executive vice president for lithium, Carlos Díaz. He highlighted the company’s role as one of the largest lithium producers in the world for more than two decades, a period in which it has invested in technologies and developed its own processes «with one of the lowest environmental footprints in the industry.»

«This alliance will allow both companies to contribute even more to the decarbonization of the planet on a global scale,» said Díaz, continuing with SQM’s line of action and discourse in favor of policies against climate change and the energy transition, disregarding that its production and consumption model would remain intact.

The difficulty of including the word justice in this exchange is precisely because these are two parties with unequal realities. This is how Bárbara Jerez, an academic and researcher at the Department of Sociology at the University of Concepción, sees it. «We are in countries with highly unequal societies, with political classes that consider that this is the way to generate development, to generate well-being, exploiting territories beyond their capabilities. This reproduces many inequalities because it generates environmental impacts and tensions with indigenous peoples and also makes the country dependent on the fluctuations of raw materials. They are green market solutions, in which they seek to replace traditional cars with electric cars but on a large scale, without questioning the use of the car and without questioning the consumption of electric cars,» says Jerez.

Coloniality in discourse and practices

Bárbara Jerez prefers to talk not just about colonialism but also about coloniality since it is a much broader concept. «It covers not only historical or economic dimensions, but also cultural, ontological, and epistemic dimensions.» The researcher believes that it is necessary to also include these inequalities in the debate in public spaces and that the concept of colonialism must be revisited so that it is not only interpreted as an issue about where the economic benefit will remain. «We also need to look at our own ways of responding to the climate crisis, which go beyond mining, and think about various possibilities to confront climate change, where I believe it is necessary to overcome this imposition,» reflects Jerez.

The researcher says it is necessary to «displace other views of reality, where many come not only from Latin American critical thinking but also from the own visions of indigenous peoples, from social movements, and that are there because they have always existed. Today, it seems that there is a good platform to show the different knowledge systems and ontologies in the public debate, which, perhaps, were not so visible before.»

With the launch of the National Lithium Strategy, the Chilean State intends to position itself as a key player in the entire production cycle through the public-private venture of the National Copper Corporation (Codelco) and the creation of a National Company of Lithium.

Chile has one of the world’s largest lithium reserves in its northern salt flats. However, as the EU seeks deeper collaboration with Latin America to satisfy its growing lithium hunger, Chile wants to put its cards on the table. «We do not want to sell lithium to Europe… We want to sell lithium vehicles that run on lithium batteries,» said Argentine Undersecretary for Latin American and Caribbean Affairs, Gustavo Martínez Pandiani, on the sidelines of a summit between EU leaders and their Latin American counterparts.

«This was the first time that we had the opportunity to discuss in such clear terms a mechanism that would move us away from extractivism in Latin America,» said the president of Argentina, Alberto Fernández, at the time. However, experts are clear about one thing: the region’s pressure for greater control of those resources is unlikely to affect the bloc’s supply negatively.

For Bárbara Jerez, some people think that the way to save the world is through batteries, that peripheral countries have to provide the raw materials, and that this will be done with the utmost environmental care. «But the policies between the European Union and Latin America, as well as environmental policies, are too unequal. It is taken for granted that here in Chile, there are good environmental measures, or the gaps that exist are often omitted,» says Jerez, who recognizes that the State has made some attempts to improve environmental policy. «However, it is insufficient compared to the need to improve the knowledge we have of the basins, to improve the conditions of environmental inspections, which are slow, the lack of public workers devoted to these issues, and the need for more legitimate participation processes. There is still a long way to go,» she says.

«There is not necessarily a conflict between Europe wanting to develop its own refining capacity and at the same time supporting partner regions such as Latin America to do the same,» said Chris Heron, the spokesman for industry lobby Eurometaux. He argued that demand for minerals is so big and «so high that both will need to work together.»

However, many electric cars are designed for European roads, not Latin American ones. Banning combustion engine vehicles in 2035 would increase demand and put even more pressure on its partners in the Global South to reach agreements convenient for European companies. A study from KU Leuven, a Belgian university, shows that lithium demand will have a 35-fold increase by 2050. According to the International Energy Agency, global lithium production has tripled since 2015 reaching 100,000 tons per year in 2021. Experts also doubt that Latin American countries will quickly increase battery production.

The NGO Fima’s executive director recognizes that the just transition issue is complex in that this concept has generally been applied to policies that are internal to the countries. There has not yet been sufficient reflection on the application of this principle in the complete production chain of goods traded in the world. Some laws in Germany, France, and the United States already observe production chains and comply with environmental and human rights standards. «That’s good news. However, they still do not integrate the idea of a just transition. It seems to me that one of our challenges as civil society is to press for this logic to be integrated,» says Costa.

He assures that «the just transition in a country in the global North cannot mean generating more injustices in a country in the global South. This has little sense of solidarity, and, in some way, it fails to comply with the idea of a just transition. Workers’ movements and environmental movements have promoted this idea. And, of course, it has this broader vision about protecting people’s lives and the habitability of territories, not only within a country but generally in the world.»

*This publication has been possible thanks to the support of the Tanti Foundation

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