The Dark Side of the Lithium Boom

By Haley Zaremba - Mar 20, 2024

• Increased renewable energy production requires a massive increase in lithium production.
• 
  
• Lithium extraction in South America's Atacama Desert is highly water-intensive and threatens local water supplies.
• 
  
• Locals fear environmental damage and economic exploitation from foreign mining companies.

Lithium has become one of the most sought-after metals in the world as the clean energy transition accelerates around the world. This ‘white gold’ is an integral part of many technologies at the heart of the decarbonization movement, including solar panels, electric vehicle batteries, and batteries used for renewable energy storage. As a result, demand for lithium is rapidly increasing, and countries around the world are racing to shore up supplies. 

According to estimates from the International Energy Agency (IEA), renewable electricity capacity additions reached 507 GW in 2023, almost 50% higher than the previous year. “Solar PV and wind additions are forecast to more than double by 2028 compared with 2022, continuously breaking records over the forecast period to reach almost 710 GW,” IEA stated in its Renewables 2023 report.

The breakneck growth rate will require a major intensification of manufacturing capacity addition for key components such as photovoltaic solar panels, wind turbines, and lithium-ion batteries for EV engines as well as renewable energy storage –  which is to say, it will require a whole lot of lithium. A 2023 report from Popular Mechanics calculated that “an electrified economy in 2030 will likely need anywhere from 250,000 to 450,000 tonnes of lithium.” To put that massive number in perspective: “In 2021, the world produced only 105—not 105,000—tonnes.”

While the rapidly increasing value of lithium presents some benefits to the economies where large lithium deposits are found, it also brings with it some very serious trade-offs. In South America’s lithium triangle, for example, the expansion of lithium extraction in the salt flats of Argentina, Bolivia, and Chile is a highly contentious issue. As industry from the United States, Russia, and China offer major deals for extraction of the white gold that stand to enrich some players in South America, locals fear that such deals will cause irreparable damage to the ecosystems they depend on for their livelihoods.

Traditional lithium extraction is an extremely water-intensive endeavor. According to a report from WIRED magazine, extracting a single ton of lithium requires approximately 500,000 liters of water. It also poses a potential threat of contaminating existing water reserves. This is because lithium is typically extracted by pumping brine into ponds, allowing them to evaporate, and harvesting the remaining lithium salts. 

This water use poses a major issue to the communities where the lithium is found, as it is concentrated in desert environments. The famous lithium triangle encompasses the Atacama Desert and surrounding arid regions, which just happens to be the driest desert in the world. Water is extremely precious to those who live there, and opposition to competition for the scarce resource is understandably fierce.

On top of these problems, the chemicals used in lithium extraction are extremely toxic and pose a threat to human health. "The release of such chemicals through leeching [sic], spills or air emissions can harm communities, ecosystems and food production," reads a recent report from international environment activism group Friends of the Earth. "Moreover, lithium extraction inevitably harms the soil and also causes air contamination."

Locals in the Atacama Desert are also highly vulnerable to the effects of climate change, which they are already feeling to an intense degree. This is a painful irony – lithium production is essential to curbing climate change, but may wipe out their water resources even more quickly than global warming ever could. Moreover, the locals that stand to face the highest cost for this industry will likely reap none of the benefits. Bolivian quinoa farmers living in rural areas that may or may not have access to electricity have relatively little use for electric cars. They will also almost certainly see none of the money from high level lithium deals. 

Such farmers are a microcosm of a bigger issue of exploitative extraction. The companies that are targeting these lithium reserves are almost exclusively foreign companies, which means that the benefits to local economies are relatively limited. While Lithium Triangle companies have already signed a number of deals with Chinese and Russian firms, the political climate is changing in favor of domestic production and processing of lithium. “Adding value is central for us,” Argentina Mining Undersecretary Fernanda Avila was quoted by Bloomberg last year. “We know the industry today is growing and there’s a lot of pressure and price volatility. But it’s about making the most of this window of opportunity, not just by shipping out lithium carbonate.”

By Haley Zaremba for Oilprice.com