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As the cliché goes, the global economy is inextricably interconnected.  Easy to say, but still surprising to see it unfold in front of us – especially when the nation illustrating the truism is the world’s 44^th largest economy, with a GDP roughly the size of Indiana.

But small size belies the multiplier effect of Critical Minerals, which can have an outsized impact on the global economy.

On April 20, 2023 Chile’s President Gabriel Boric announced his plan to nationalize the country’s lithium industry to boost the Latin American nation’s industrial base and protect the environment.  Falling short of full nationalization, the proposals envision majority state-owned partnerships with private companies for lithium exploration and production, and would require that the two lithium miners currently operating in the country, Chile’s SQM and U.S. company Albemarle, “negotiate an unspecified state participation in their existing concessions, which run to 2030 and 2043 respectively.”

Considering that Chile is the world’s second largest lithium producer, observers called Boric’s announcement a “shock move,” but in all reality, Chile is only the latest in a series of countries resorting to resource nationalism at a time when critical mineral demand is soaring.  As for the shock effect, Boric’s plans to nationalize mineral operations were well-known.  The shock seems to result from global observers who are still learning to appreciate the importance of parts of the Periodic Table more critical to economic growth than ever before.

But there is something new under the Latin American sun.  As Peter Schechter and Juan Cortiñas outlined in a February 2022 piece for Marsh McLennan’s Brink News ARPN featured at the time, the shunning of laissez-faire economics, particularly in Latin America, is not new. “What’s different this time,” they say, “is that these new interventionist policies are not only focused on the traditional energy sector. Instead, the region’s attention is turning to increasingly valuable minerals that are key to the new green economy quickly gaining momentum across the world.” 

Chile’s move comes on the heels of a comprehensive lithium nationalization plan enacted by Mexico which culminated in President Andres Manuel Lopez Obrador signing a decree handing over responsibility for lithium reserves to the country’s energy ministry in February of this year.

Bolivia’s ruling socialists have also favored state control over the nation’s vast untapped mineral resources but are relying on Chinese partners to harness them.

Meanwhile, some speculate that had it not been for his ouster, Peru’s President Pedro Castillo, who won a narrow victory in 2021 and had initially pledged to nationalize much of the country’s mining sector, might have pursued an approach similar to Boric’s in Chile.

While Peru may have bucked the resource nationalism trend, and is now “watching from the sidelines” as it gains steam, for all its resource riches, lithium watchers have their eyes on the last remaining holdout against the region’s statist trend:  Argentina.  There, a number of lithium projects currently in development are open to foreign investment and capital.  But across the region, and with Chile joining Mexico and Bolivia, the Argentinian exception proves the rule.

With resource nationalism rising across the Latin America region, stakeholders in the U.S. must heed the lesson that the best approach to shoring up our own critical mineral supply chains is a comprehensive “All of the Above” approach.

The increasingly popular strategy of “friend shoring” is an important pillar of this approach, and of course, remains highly appealing to policy makers with “not in my backyard (NIMBY)” constituencies.  However, as we previously outlined:

“[Friend shoring] will not be sufficient to meet our vast material needs, particularly as NIMBY-ism is going global.

It’s time we come to terms with the fact that as much as we want to rely on our friends and allies, this can only be part of our critical mineral resource strategy.  To succeed and remain competitive in the 21st Century, we will also have to harness our arguably vast domestic resource potential across the entire value chain — from mine to manufacturing.”

 

In a new video clip, the Wall Street Journal explores one of the areas of competition between the two superpowers that is emerging as a key theater of the 21^st century tech wars: EV battery supply chains.

Followers of ARPN know all too well, and our friends at Benchmark Mineral Intelligence clearly visualized this fact in an infographic last fall: the United States has long been at the mercy of China when it comes to securing our EV battery supply chains, which sit at the heart of the green energy transition.

For your convenience, here’s the visual again:

As the Wall Street Journal outlines in its video clip, the “U.S. lags in most steps of the battery making-process, from sourcing raw materials to assembling components.” 

Whether or not the U.S. can overcome these disadvantages remains to be seen — the WSJ points to the United States’ efforts to build out domestic mining and processing capabilities and leverage partnerships, but also rightfully points out that both approaches are fraught with immense challenges, which range from long permitting timelines for mining and processing projects to the NIMBY (not-in-my-backyard) movement going global.

However “Herculean,” in the words of the WSJ,  the task may be — against the backdrop of ever-increasing tensions between the United States and China, and with demand for critical minerals; be it the “battery criticals” or the “defense criticals;” soaring to unprecedented heights, there is no alternative to decoupling U.S. supply chains from China, and the sooner stakeholders come to term with this reality, the better.

Watch the video clip here. 

The time has come for the United States to get “serious about mining critical minerals for green energy,” writes Saleem H. Ali for Nature. Ali points to the inherent irony of the green energy transition — renewable technologies requiring vast and increasing amounts of metals and minerals like lithium, copper, nickel, cobalt, manganese and REEs, but [...]

  2022 surely was as fast-paced a year as they come. Didn’t we just throw overboard our New Year’s Resolutions?  We blinked, and it’s time for another review of what has happened in the past twelve months. So with no further ado, here is ARPN’s annual attempt to take stock of what has happened on the [...]

Pressures on already strained battery material supply chains are mounting, and not just due to geopolitical tensions and rising demand in the context of the green energy transition. The U.S. Department of Labor has included lithium-ion batteries into its “List of Goods Produced by Child Labor or Forced Labor” – a list of 158 goods from 77 [...]

As the U.S. House of Representatives has passed its version of the FY 2023 National Defense Authorization Act (NDAA), another piece of legislation enacted earlier is beginning to bear fruit in the context of strengthening our nation’s critical mineral supply chains. Earlier this summer, the U.S. Department of the Interior announced it had set aside [...]

Geopolitical tensions, Russia’s war on Ukraine, rising resource nationalism in the Southern hemisphere – against the backdrop of ever-increasing stakes it appears that a new theater in the global resource wars has opened up: Cyber warfare, and more specifically, according to Defense One, “weaponized NIMBYism.” The U.S. Department of Defense has announced that it is investigating a recently-unearthed disinformation [...]

It’s that time of the year again.   We’re gearing up to celebrate the men and women who have fought for, and continue to safeguard our freedoms.  It may not feel like it when the cost for the average July 4th cookout has drastically increased, but we have much to be thankful for, particularly at a time when geopolitical [...]

On the heels of the coronavirus pandemic having exposed the West’s overreliance on Chinese supplies of mineral resource supplies, Russia’s war on Ukraine has set off a potential realignment of critical mineral resource supply chains that warrants attention. Moscow’s invasion of Ukraine has largely isolated it on the global front both diplomatically and economically, and, [...]

In yet another indication that increasing demand and supply chain challenges in the wake of the coronavirus pandemic and war in Ukraine have raised the geopolitical stakes, U.S. Secretary of State Anthony Blinken explicitly referenced critical minerals and the United over-reliance on China both in terms of mining and processing in a speech outlining U.S. policy [...]