Belveal 1

Axyle Belveal

Dr. James Baginski

GES 1980

April 10, 2022

Lithium

Introduction

Lithium as a commodity has a wide array of applications in battery, ceramics, and

lubrication production. The demand for high-grade lithium in battery production continues to

skyrocket as countries produce more Electric Vehicles (EVs). Consumers opt for EV vehicles

today due to rising gas prices, reducing fossil fuel consumption, or personal preference. Lithium

is crucial in lithium-ion battery (LIB) production for cars, phones, and other electrical equipment

and determines if top car companies like Tesla, Volkswagen, and BMW can meet the demand of

consumers. The volatility of LIB materials, including lithium, has encouraged countries and

companies to develop LIB recycling strategies. To secure lithium supplies, foreign investment in

regions such as South America and Australia has formed closer economic and social ties with

China, Japan, and the U.S. Lithium will continue to play a role in combatting climate change.

Lithium Extraction in Argentina

According to the U.S. geological survey, the lithium triangle consisting of Argentina,

Bolivia, and Chile contains approximately 65% of the world’s Lithium reserves. These reserves

lay in high-altitude salt flats within mineral-rich brine. The mines will first pump this brine to the

surface, where sodium, potassium, magnesium, calcium, and lithium reside. The brine comprises

about .2% lithium and almost 30% salt. The brine will run through several evaporation pools to

enrich its lithium content before being sent to a nearby chemical plant for further refinement. The
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chemical plant works to separate magnesium and sulfate from the brine to increase the

concentration of lithium in the brine. Finally, the plant achieves a 99.5 percent lithium carbonate

concentrate with washing and ion exchange processes (Drobe). Foreign investors look for a high-

grade lithium concentrate in the downstream lithium refinement process.

Economic Impact

The high concentration of lithium found in South American brine attracts Chinese foreign

investment. China partnered with Lithium Americas out of Canada, and the country of

Argentina, to open a new Lithium production plant in northern Argentina. The Cauchari – Oloraz

project will boost Lithium production by 25,000 metric tons. To put this into perspective,

worldwide lithium production in 2021 was 100,000 metric tons, while global consumption

reached 93,000 metric tons (USGS, 104). The potential of the Caucharia – Oloraz project and

surrounding areas have brought interest to this region from China, the United States, and Japan.

The figure below identifies three Lithium plants in Argentina, two of which are operational.

Fig 1. Lewkowicz, Javier. “Argentina at Crossroads Over the Future of the Lithium Sector.”,

2021, https://dialogochino.net/en/extractive-industries/argentina-future-of-lithium-sector/
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The introduction of foreign investment means Argentina will see demand for unskilled and

skilled labor in the extraction and manufacturing sector. The jobs spur economic activity in this

region and provide several hundred families with income. Argentina remains a prime example of

the resource curse. The countries within the lithium triangle above lose money when primarily

managing the extraction, manufacturing, and exporting of lithium carbonate. The downstream

refining process, or the manufacturing of Lithium-ion batteries from exported lithium carbonate,

generates the most value. Argentina will then import the expensive technologies such as EVs,

smartphones, and machinery that rely on their lithium reserves, resulting in unbalanced terms of

trade. (Lewkowicz, 1). Chile strategically limited foreign exploitation of its natural resources to

protect its domestic economy and utilizes its natural resources more strategically. Unlike Chile,

Argentina continues lithium extraction operations under foreign investment due to the increased

demand and price of lithium.

Environmental Impacts

The lithium extraction process has developed several environmental concerns regarding

the local communities. The average lithium producer needs approximately five hundred thousand

gallons of water to produce one metric ton of lithium. In project areas operating out of Chile, like

Salar de Atacama, mining operations account for almost 65% of available water. (Bauer, 1). The

water used in evaporation is not drinking water, however, the lithium mines extract large

amounts of salt water, which can pollute or influence changes in surrounding groundwater,

subsequently poisoning local human and animal populations and destroying agricultural yields.

Currently, the communities living near lithium mines in South America protest mining

operations. The environmental impacts have encouraged Argentina, Bolivia, and Chile to pursue

more regulation on Lithium extraction, but it also encourages further innovation in the industry.
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China, the United States, and Japan continue to seek alternative and environmentally friendly

ways to extract lithium from brine. The controversial nature of Lithium extraction divides the

world today. The indigenous people of Argentina see the Lithium mining operations as intrusive

and counterintuitive, while consumers and governments demand lithium batteries for EVs to

combat the burning of fossil fuels.

Lithium Extraction in Australia

Australian companies have partnered with China to develop various strategies to refine

raw lithium into battery-grade lithium. Australia, the largest lithium-producing region, exploits

lithium found in spodumene, a hard rock mineral deposit found below the surface in Western

Australia. Unlike the extraction of lithium from salt flats in Argentina using evaporation pools,

Australia mines hard rock spodumene using excavation techniques and moves the ore to a

processing plant. Here operators will blast, crush, and push the mined spodumene to allow easier

processing. The density of lithium in the crushed spodumene will determine how the plants

process the material. High-density spodumene requires remaining gangue materials (considered

worthless) to be separated from the spodumene using chemicals. Further down the line, the

spodumene is roasted in a kiln, leached with hydrochloric acid, and purified to enrich the lithium

content (Drobe). Before any more refinement occurs, Australia exports this spodumene as a raw

material.

Economic Impact

Australia sells much of its concentrated spodumene directly to consumers who refine it

further into lithium carbonate and lithium hydroxide. Much of the refining processes take place

in East Asia, such as China and Taiwan, effectively stretching the value chain of this commodity.

In 2017, Australia accounted for 63% of the world’s production of Lithium (Drobe).
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Furthermore, approximately 80% of Australian lithium exports go to China (LaRocca). FIG. 2

below compares lithium exports and imports between leaders in lithium production. Future

trends will likely mean heavier lithium trade relationships between Australia and China.

Fig 2. LaRocca, Gregory M. “Global Value Chains: Lithium in Lithium-ion Batteries for Electric

Vehicles.”, 2020.

The value of lithium exports in Australia has reached over one billion dollars, and lithium mines

have seen increased demand for labor in this region. In addition, FIG 3 shows the result of

Chinese foreign investment in Australia in the Mount Marion mine, which produced 15.9

thousand metric tons of lithium in 2018 (LaRocca). The international market of lithium has

effectively brought two regions closer together economically. Like Argentina, the lithium-rich

spodumene exported to China will generate more value from downstream refining, leaving

Australia out of a large profit margin. Australia originally exported spodumene to China due to

the massive scale of the Chinese battery industry, their aggressive strategy towards foreign

investment, and their demand for lithium (LaRocca). Recently, Australian authorities have
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discussed driving more investment toward local refining of spodumene to lithium carbonate and

lithium hydroxide. Australia is interested in investing in downstream refining of lithium for its

high reward in lithium-ion batteries as demand for EVs continues to skyrocket worldwide.

Environmental Impacts

The massive lithium mines producing the world’s lithium have developed controversial

environmental concerns. Hard rock extraction involves the removal of overburden and typically

creates a large amount of waste. As depicted in FIG 3 below, the tailings pond contains several

varying chemicals and concentrates that are extremely expensive to dispose of properly. Leaking

of tailings ponds rarely occurs, but in Southwest Australia, where agriculture occurs, a leaking

tailings pond has the potential to poison groundwater. In addition, the water needed to filter the

spodumene mostly comes from rainwater in this region, with little impact on local water

supplies.

Fig 3. “Development History – Mt. Marion Spodumene Project." Ganfeng Lithium,

http://www.ganfenglithium.com/about1_en.html.
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The mining of lithium requires energy-intensive, fossil fuel burning machinery to remove rock

from the ground, transport the raw material on cargo ships, and send it worldwide to refineries.

The fight against carbon emissions and the adoption of Lithium-ion batteries to transform society

will become another environmental issue to tackle if the extraction process continues impacting

the environment negatively (Katwala). Australia will need to implement strategies to reduce

chemical, water, and energy usage. Perhaps further investment in this industry will promote more

sustainable operations and attract more downstream refining and manufacturing to diversify the

Australian economy (LaRocca).

Lithium Refinement in China

China, the world’s largest producer of refined lithium products, has developed the most

active region today in terms of lithium-ion battery production. China's refining and production of

LIBs, lithium-ion batteries, accounts for approximately 134 GWh (Gigawatt hours). In

perspective, this accounts for 61% of global LIB production (LaRocca). To produce LIBs, China

needs massive imports of lithium concentrates from Australian, South American, and their

mines. As shown below, Chinese factories refine spodumene from Australia into lithium

hydroxide and import already refined lithium carbonate from South America. Refineries combine

these two concentrates with hydrochloric acid and further potassium chloride to produce lithium

chloride and lithium metal.

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Fig 4. LaRocca, Gregory M. “Global Value Chains: Lithium in Lithium-ion Batteries for Electric

Vehicles.”, 2020.

In Fig 4 above, companies like Ganfeng Lithium follow a similar refinement process. China

prefers lithium hydroxide primarily because it’s cheaper to produce from raw spodumene coming

from Australia. Lithium hydroxide also has a price premium over lithium carbonate, making it a

more attractive product. LIB manufacturing firms use refined lithium chloride and lithium metal

concentrates in producing cathodes and electrolytes.

Social, Economic, and Environmental Impacts

The aggressive behavior of Chinese firms to acquire and control advanced-technology

industries, including EVs, has brought worldwide attention. Chinas investment in regions such as

South America and Australia has improved trade relations, brought demand for labor, and

developed innovative lithium mining operations. However, investment in these areas has created
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controversial impacts on the environment, and the trade negotiations continue to leave lithium

exporters at a loss. Lithium mining in Argentina, Chile, and Bolivia consume and pollute

groundwater, which results in protests from local populations. The further refinement of lithium

concentrates occurring in China creates large amounts of chemical waste that require specialized

and expensive disposal. In addition, South American countries and even Australia have

considered an investment in the lithium refinement process and downstream lithium production

to diversify their economy and combat losses created by downstream production occurring in

China, Japan, and the U.S.

Lithium in LIB/EV Production

EV producers prefer a lithium-ion battery for the power, charge potential, and lifespan it

provides. LIBs create voltage through a process of carrying electrons from an anode to the

cathode through an electrolyte. Chinese LIB manufacturers use refined lithium salts in LIB

electrolyte production and lithium hydroxide in LIB cathode production. Furthermore, each piece

is carefully assembled into a battery pack and tested for efficiency in a separate process

(Heilweil). LIBs are crucial for EVs to operate, and current trends forecast increased demands

for these emission-free vehicles.

Global LIB production

LIB production can occur in several locations, and several different chemical processes

can create an adequate lithium concentrate. Today, most production occurs in the Northern

Hemisphere in China, Japan, and the U.S. For example, Chinese Companies like CATL and

Ganfeng Lithium partner with EV companies such as Tesla in the U.S.A and Volkswagen in

Germany to ensure supply sustainability of lithium in the coming years. Ganfeng Lithium will

provide Tesla with refined Lithium hydroxide starting in 2022, and this deal will last three years
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(Zhang). Tesla is the largest LIB producer for EVs in the U.S.A and one of the largest in the

world. In 2017, Volkswagen finalized a Memorandum of Understanding with Ganfeng Lithium

for refined lithium originating in Australia. Overall, EV adoption has increased sharply, partly

due to changing government policies in favor of reducing greenhouse gas emissions. In 2019,

sales only reached 2.5% of the total global market in car sales. In 2021, companies sold 6.6

million electric cars, making up 9% of the global market (Paoli). As the Northern Hemisphere

encourages EV adoption, LIB production will increase, and the demand for lithium will go up.

Tesla EV Production

The partnerships between Tesla and Ganfeng Lithium will tie two economically and

culturally different regions together. Tesla, the pioneer of mass EV production, relies on lithium

flowing from South America or Australia through Chinese companies in their LIB production.

Tesla’s largest EV factory resides in Fremont, California, and supports around 22,000 employees

who make $21 per hour on average. The factory produces over 8,000 vehicles a week, and Tesla

alone stimulated approximately 4.1 billion dollars in direct spending in California (Tesla). Tesla

EV production has positively impacted the economy of the United States. However, workers

report a toxic work environment that encourages long work hours and disregard for human

health. Tesla management reportedly put production over the health of their workers and

regularly used the term “You can’t man up?” (Palermo). Employees face pressure and work to

meet the demand coming from China, Europe, and the U.S.A. FIG 5 below provides 2021

exports of EVs. Tesla exported 321 thousand EVs to China, 170 thousand to Europe, and 352

thousand to the U.S (Paoli). The demand for Tesla EVs has brought economic success to

California and has exported hundreds of thousands of emission-free vehicles worldwide.

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FIG 5. Paoli, Leonardo. "Electric Cars Fend Off Supply Challenges to More than Double Global

Sales – Analysis.", January 30, 2022, https://www.iea.org/commentaries/electric-cars-

fend-off-supply-challenges-to-more-than-double-global-sales.

Recycling LIBs

Recycling LIBs can involve three separate processes, and these decisions depend on who

recycles the battery and what the company seeks to recover. The first strategy, pyrometallurgy,

involves smelting the LIBs in a large furnace at around 300 to 700 degrees Celsius. The heat

safely removes plastic and breaks down the sensitive electrolyte. All battery recycling plants

must discharge the cells before further processing. The pyrometallurgy method usually recovers

cobalt and not lithium, but the process provides small amounts of cathode materials for future

use. The second strategy, hydrometallurgy, utilize acids to leach the physical components of

LIBs chemically and biologically. The hydrometallurgy process is more successful in recovering

lithium and cobalt from spent battery materials. The final recycling strategy, called the direct

recycling process, does not require chemical treatment and involves physically separating pieces

of LIBs, breaking them, and recovering the cathode material using a wide array of heating,

cooling, and processing (Zhou). Finally, LIB recycling has not sought to recover lithium due to

its low commodity price and the expensive process required to recover small amounts from spent

batteries.
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FIG 6. Leotaud, Valentina. “Li-ion battery recycling market to reach $31bn per year by 2040.”,

October 1, 2021, https://www.mining.com/li-ion-battery-recycling-market-to-reach-31bn-

per-year-by-2040-report/.

Geographic Location

Most LIB recycling occurs in the Northern Hemisphere, where downstream battery

manufacturing occurs. According to FIG 6 above, the U.S., Europe, and China currently recycle

LIBs. The map also shows where each stage of production occurs.

Economic Outlook of Recycling LIBs

Today, China leads the world in LIB recycling, but recyclers only recover 30 to 40

percent of crucial materials within the battery. Chinese companies including Ganfeng Lithium,

CATL, and BYD, have increased efforts to recycle batteries from personal devices and EVs. The

American company, Tesla, claims to recycle 100% of LIBs they receive, and Australia only

recycles 2-3% of their LIBs. Within the next 5 to 10 years, as the first wave of EVs reaches the

end of life, China, Europe, and the U.S.A will see hundreds of thousands of LIBs leaving the

road. The biggest question remains if the value obtained from recycling LIBs will exceed the

cost of recycling them. Each process requires machinery, skilled labor, and energy to complete.
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The cost of transporting hazardous materials such as those found in LIBs also discourages long

shipments. Local LIB recycling plants will most likely begin to emerge (Morse). Repurposing

LIBs for secondary use or refurbishing them also shows promise in extending their life, which

reduces demand for lithium from foreign sources. However, EV producers worldwide would

rather continue cheaper, more effective methods of exploiting lithium through Australian and

South American mines.

Conclusion

Lithium remains a crucial element in EV production and the war against climate change.

South American and Australian lithium mines have accepted foreign investment from China, but

both regions show interest in investing in downstream lithium refinement occurring in the

Northern Hemisphere. The local South American populations have protested lithium mining

operations to save their groundwater supplies, but the government has struggled to weigh

economic success with potential environmental stress. Tesla, Ganfeng Lithium, and CATL have

developed recycling methods to create secondary lithium supply chains. However, the output

power of lithium mines in the southern hemisphere has discouraged costly LIB recycling

methods for lithium. In conclusion, LIB manufacturers for EVs, personal devices, or machinery

will rely on Chinese partnerships to secure lithium supplies.

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Works Cited

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2020, https://dialogochino.net/en/extractive-industries/38662-explainer-the-opportunities-

and-challenges-of-the-lithium-industry/.

Chen Shen and Huaiguo Wang. “Research on the Technological Development of Lithium-Ion

Battery Industry in China.”, 2019, https://iopscience.iop.org/article/10.1088/1742-

6596/1347/1/012087.

Drobe, Malte. "Lithium Sustainability Information.", 2020.

Gaines, Linda. “Lithium-ion battery recycling processes: Research towards a sustainable

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Heilweil, Rebecca. “How to Build a Better Battery.” April 18, 2022,

https://www.vox.com/recode/23027110/solid-state-lithium-battery-tesla-gm-ford.

Katwala, Amit. “The spiralling environmental cost of our lithium batteries.” May 8, 2018,

https://www.wired.co.uk/article/lithium-batteries-environment-impact.

LaRocca, Gregory. “Global Value Chains: Lithium in Lithium-ion Batteries for Electric

Vehicles.”, July 2020, Office of Industries, US International Trade Commission, 2020.

Leotaud, Valentina. “Li-ion battery recycling market to reach $31bn per year by 2040.”, October

1, 2021, https://www.mining.com/li-ion-battery-recycling-market-to-reach-31bn-per-

year-by-2040-report/.

Lewkowicz, Javier. “Argentina at Crossroads Over the Future of the Lithium Sector.” ,

2021, https://dialogochino.net/en/extractive-industries/argentina-future-of-lithium-sector/.
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"Lithium Mining: What You should Know about the Contentious

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you-should-know-about-the-contentious-issue.html#.

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all-dead-batteries.

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Paoli, Leonardo. "Electric Cars Fend Off Supply Challenges to More than Double Global Sales –

Analysis.", January 30, 2022, https://www.iea.org/commentaries/electric-cars-fend-off-

supply-challenges-to-more-than-double-global-sales.

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https://www.frontiersin.org/articles/10.3389/fchem.2020.578044/full.