Sun. Dec 10th, 2023
    The Sustainable Future of Lithium: Meeting Demand Responsibly

    The global energy transition has lithium as a key component in the production of electric vehicle batteries. As the demand for electric cars increases, two important questions arise in the industry: Can lithium production meet this growing demand? And can it be done in an environmentally and socially responsible manner?

    Chile holds the world’s largest lithium reserves, with most of its production being handled by SQM, a company based in Santiago. Chile’s largest lithium mine is located in the Salar de Atacama, a vast salt desert in the Atacama Desert, the driest place on Earth after Antarctica. Over hundreds of thousands of years, rainwater flowing down from the mountains has accumulated minerals, including lithium, in this salt flat. Below the surface lies brine, an extremely salty water with a valuable lithium content.

    The brine is placed in a series of pools, where the water begins to evaporate, resulting in an increase in lithium concentration in each pool. In the final pool of the Salar, the lithium content reaches nearly 5 percent. The brine is then transported by trucks to SQM’s processing plant located near the coastal city of Antofagasta, where it is converted into lithium carbonate and lithium hydroxide. These products are mainly shipped to Asian manufacturers for use in battery production. It is noteworthy that this processing plant represents almost 20 percent of the world’s lithium processing capacity.

    Although the lithium industry in Chile has boosted the country’s prominence in one of the fastest-growing sectors in the world, concerns have arisen about the potential depletion of water resources due to brine extraction by lithium companies. SQM claims to have taken measures to minimize environmental impacts and assures that studies conducted by their own experts and external researchers do not indicate harmful effects on local water resources. However, the lack of independent information poses a challenge for scientists like Mariana Cervetto, who believe that truly objective data is necessary to conclusively address this issue.

    Investors, particularly in financial centers like London, are also concerned about sustainable lithium production. As billions are invested in the lithium supply chain and other critical minerals, environmental, social, and governance considerations have become paramount. Brian Menell, founder of TechMet, an investment company involved in lithium and other essential mineral extraction and processing, recognizes the inherent finite nature of mining but emphasizes the possibility of well-governed and transparent operations with low environmental impact and carbon footprint.

    The demand for metals like lithium in the energy transition presents a unique investment opportunity, with the aim of producing millions of electric vehicles annually by 2030. Meeting this goal requires a substantial increase in lithium supply. Menell believes that prices for these metals will inevitably rise as countries seek energy security. He also raises concerns about China’s dominant market share in lithium-ion battery production and refining, and calls for additional investments to ensure a balanced and secure global supply chain.

    With the energy transition becoming ever more crucial, sustainable production of lithium and other critical minerals is essential. Achieving a balance between meeting global demand and minimizing environmental and social impacts remains a challenge, but advancements in governance and transparency offer hope for responsible and ethical practices in the industry.

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