Energy & Mining

Lithium Battles

Protests Over Potential Tesla Partner

The battle for resources will be as fierce for the green economy as it has been for the hydrocarbon trade.

The advent of green technologies is changing the world and not a second too early.

After centuries of industrial production based on coal and oil-sourced energy, all indicators show that the move toward a more sustainable balance between humanity and this little round globe we call home is finally underway.

As cities like Stockholm decide to ban non-electric cars, and as the sands of the Sahara Desert become increasingly covered by solar panels, the future is looking ever more sustainable.

New technologies in green building, district cooling, waste treatment, and environmental protection are being deployed all over the planet, albeit unevenly.

That is not to say that humanity’s efforts will be enough to curtail the catastrophic environmental damage made since the beginning of the industrial revolution.

After all, just this week the doomsday clock moved once again. It now stands at two minutes to midnight, the closest to the symbolic moment of humankind’s self-annihilation it has ever been since the peak of the Cold War. Only time will tell if humanity’s efforts will be enough to save it from environmental calamity.
All that aside, however, it is interesting to observe that even if mankind manages to curtail the impact of climate change, human nature is unlikely to change.

Take Chile, for instance.

This week, everybody’s favorite tech nerd Elon Musk visited the capital city Santiago to discuss purchase agreements of lithium to be used in the lithium-ion batteries that store the energy used to power the Tesla cars, arguably the most popular electric cars in the world.

Tesla is opening its first gigafactory in the Nevada desert, the biggest building on the planet by land area covered. It will be the first of four to be opened before 2020.

Tesla is not alone in this battle. Many other major car manufacturers are aggressively pursuing electric car options, almost all of them relying exclusively on lithium-ion batteries to power their cars. Within this context, even though Lithium only makes up a small part of the materials used in the batteries, it is unsurprising that the metal has been dubbed “white gold,” having risen 200% in price over the past five years.

As with actual gold, or black gold (oil), the exploitation of these resources has caused much controversy.

Elon Musk’s presence in Chile this week has coincided with a deal struck between the Chilean government and Sociedad Quí­mica y Minera de Chile (SQM), one of Chile’s major Lithium mining companies.

The agreement reviews royalty payments and establishes expanded exploration rights for SQM until 2030. This was the culmination of a long dispute between the company and the government over royalty and tax payments that brought up a lot of questions over SQM’s governance and reputation.

SQM has been accused of everything from corruption, worker abuse, tax fraud, and financial misconduct.

Last week, a Chilean court accepted a USD4.2 million fine from SQM to withdraw a pending legal trial and allow the company to pursue negotiations with the government.

Needless to say, the resolution did not appease everyone.

A group called Movimiento Litio para Chile (Lithium for Chile Movement) is demanding that the metal be designated as a “strategic” asset for the Chilean nation and that the state should retain control of the reserves.

A protest organized in Santiago’s Plaza Italia this week attracted hundreds of demonstrators.

The crowd called for the cancellation of the SQM contract. Dozens were arrested after violent confrontations with the police.

Chile holds the world’s largest known lithium reserves, with over 50% of all known deposits on the planet.
Demand for Lithium is expected to remain high in the coming years, as car manufacturers around the world establish new production facilities for their electric cars.

Tesla has, so far, been able to secure Lithium supplies, but the real volume is expected to come when its gigafactory begins production of a targeted 5,000 units per week of the Tesla 3 model. Chile and Argentina are both expected to sharply raise their Lithium production capacity over the coming years as global demand intensifies.

Ironically, the dispute between major economic interests, governments, and social groups demanding the use of natural resources for the benefit of the people are strikingly similar to protests against oil and coal exploitation in many parts of the world. The green economy may yet save the environment from humanity, but it will not save humanity from itself.