SHANGHAI, Market 30 (SMM) - Recently, the long-lost "OPEC-like cartel for the lithium industry" concept has once again entered the sight of the lithium market with the speech of the Ministry of Foreign Affairs of Bolivia. According to CCTV news reports, on March 24 local time, the Ministry of Foreign Affairs of Bolivia issued a message saying that it called on Latin American countries that produce lithium resources to respond to the Bolivian President's call and work together to accelerate the formation of the OPEC-like cartel for the lithium industry.
It is reported that Bolivian President Luis Arcein recently publicly criticized Bolivia and other Latin American countries for their policy of developing lithium mines through international cooperation, and decided to call on Chile, Argentina, Peru and other countries with large lithium reserves to join Bolivia to accelerate the establishment of an organisation of lithium producers led by Latin American countries.
In terms of lithium prices, taking Pilbara as an example, the auction prices of its spodumene rose by $6,255/mt, an increase of 500.4%.
According to SMM spot prices, the domestic average spot price of lithium carbonate was only around 53,000 yuan/mt at the beginning of 2021, but since entering 2022, the price skyrocketed by almost tenfold to as high as 567,500 yuan/mt. Therefore, in recent years, lithium, as a precious and scarce resource, has been increasingly valued by various countries.
In March 2021, the former Minister of Foreign Affairs of Argentina also took the initiative to discuss matters related to the OPEC-like cartel for the lithium industry with the Bolivian authorities. The idea of national power to regulate mineral resources was proposed, and discussions were rampant. Then, it was reported that the foreign ministers of Argentina, Bolivia and Chile were negotiating to reach a tripartite agreement on the production and commercialisation of lithium. And recently, Bolivia's president's call again seems to mean that the OPEC-like cartel for the lithium industry is getting closer.
The reason why the actions of the above-mentioned countries have attracted such a large amount of attention is inseparable from the rich lithium resources in their own countries. According to the US Geological Survey, as of 2021, the global lithium reserves are 22 million mt. Among them, Chile's lithium reserves are 9.2 million mt, accounting for 41.8%; Argentina's lithium reserves are 2.2 million mt, accounting for 10%. The lithium reserves of these two countries exceed 50%. In contrast, China's lithium reserves are only 1.5 million mt, accounting for 6.8%.
It is worth mentioning that, against the background of the increasing importance of lithium resources, the concept of establishing the Latin American "the OPEC-like cartel for the lithium industry" has even been supported by countries such as Mexico and Peru, both of which have abundant reserves of lithium resources.
Australia has long set limits to protect their own lithium resources
In addition to the above-mentioned countries, Australia also has considerable reserves of lithium resources. In 2022, the "the OPEC-like cartel for the lithium industry" of the three Bolivian countries also proposed the decision to absorb Australia, which also added more uncertainty to its future.
However, according to SMM, in recent years, the Australian government has imposed stricter restrictions on Chinese companies investing in lithium mining companies. Since the Australian government required all foreign investment in Australia to be reviewed by FIRB in 2019, it has blocked many investment projects involving Chinese companies.
Australia, on the other hand, implements a series of restrictions and laws on overseas companies investing in lithium mining enterprises, mainly to protect the country's national interests and the sustainability of resource development. On the basis of these restrictions and laws, the Australian government is also actively promoting the development of domestic enterprises in response to changes in the lithium mining market and challenges in the global economy.
In addition, Canada has also required three Chinese companies to divest their lithium mine assets in Canada on the grounds of national security since November 2022. However, in mid-March, Canada’s Minister of Natural Resources suddenly changed his mind and said that Canada would not force Chinese state-owned investors to divest their shares in the country’s three large mining companies due to concerns that policy uncertainty would dampen the confidence of future investors. It also mentioned that it will continue to trade with China, involving trade in key minerals.
Although the Canadian government's inconsistent approach seems to have loosened some control over lithium resources, in fact, according to the views of the Canadian mining industry, it seems that local mining companies had no choice but to cooperate with China due to the insufficient funds. It believes that lithium exploration is a long-term, high-risk investment. If Chinese capital is rejected, it will be difficult for Canadian mining companies, especially small and medium-sized mining companies, to attract funds.
Industry insiders also said that if Canada shuts out Chinese companies, it will not only cause financial losses, but also affect the export of mineral resources to China. If things go on like this, Canada’s long-term competitiveness in the mineral field may be affected.
On the whole, up to now, lithium has not only been included in the list of key mineral resources in resource countries such as Chile, Australia, Canada, and Congo (DRC), but also has attracted much attention in major new energy vehicle market in the United States, the European Union, and Japan.
