Energy is a weapon in wartime and a key to prosperity in peacetime. As the world moves towards greater adoption of renewable energy sources and electric vehicles, we need to ensure that America’s supply chains are not creating new long-term dependencies upon economic adversaries.
Consider the case of solar panels. Solar panels were invented in the U.S. and for a while America dominated the industry, making 95 percent of all solar panels in 1978. Today, however, the vast majority of solar panels and components are made in China—sometimes by slave labor. America, meanwhile, makes less than 1 percent of the solar components used worldwide.
A similar story is playing out for the batteries needed to power American technology and electric vehicles. Electric vehicles are projected to make up half of all car sales globally by 2035 and currently, the batteries and components needed for them largely pass through China. Equally important are the critical minerals and metals needed to manufacture such batteries—elements like lithium, cobalt, nickel, and copper, which are increasingly extracted at Chinese-owned mines.
To control our economic and energy future, the United States will need to have ready access to its own supply of raw materials and minerals. Perhaps no mineral is more important to America’s energy transition than lithium—and no region is more important for lithium than Latin America.
Lithium is essential for electric vehicles and wind and solar energy storage, not to mention long-lasting cell phones, laptops, and watches. Demand for lithium is expected to increase by 4,000 percent over the next two decades. But while the United States was once a leader in lithium production and processing, China has increasingly cornered the market. Beijing now controls 65 percent of global lithium processing and refining capacity and accounts for three-quarters of lithium-ion battery production.
What China has not controlled in the past is the raw material, but that is beginning to change. For example, Bolivia has one of the world’s largest lithium reserves, much of it relatively untapped. Together with Chile and Argentina, Bolivia is part of the “Lithium Triangle,” home to nearly 60 percent of all global lithium reserves. (By contrast, the U.S. contains just over 3 percent of global lithium reserves and only a single active lithium mine.) China is working overtime to secure extraction contracts throughout the Lithium Triangle.
In January, news broke that a consortium of Chinese companies won a billion-dollar project to begin the development of Bolivia’s massive lithium reserves. A U.S. company, EnergyX, had bid on the project and was the only bidder to successfully demonstrate its technology with a pilot plant on site, but was disqualified in June 2022 after missing a deadline by 10 minutes. China also owns major stakes in lithium projects throughout Argentina and Chile, and Chinese companies recently beat out Tesla to mine lithium in Nigeria. Australia, a major global producer of lithium, also sends the bulk of its raw material to China.
Argentina, Bolivia, and Chile all need substantial foreign investment to tap their lithium reserves, but turning to Beijing is likely to bring with it environmentally destructive Chinese mining practices, notoriously corrupt Chinese procurement methods, shoddy Chinese infrastructure, and Chinese steamrolling of local opposition.
The United States and other democracies in the Western Hemisphere should make a better offer, based on transparent, fair, and mutually profitable agreements that allow countries to exploit their resources for the betterment of their people and the global free market. Stronger ties to Bolivia, Argentina, and Chile could also help stabilize wavering democracies and provide a strong energy answer to autocratic, oil-based Venezuela. The United States has a chance to remake its relations and alliances throughout Latin America and, simultaneously, help the Western Hemisphere shape its shared energy future.
Failure would be devastating. The past is littered with examples of what happens when the U.S. allows autocratic governments to control our access to energy.
OPEC currently controls around 40 percent of the world’s oil supply and Russia—not technically an OPEC member—controls another 10 percent. And even with that limited stake largely in the hands of authoritarian countries, the United States, Europe, and democratic allies have been held economically hostage for decades by non-democratic forces to meet their energy needs. As the war in Ukraine illustrates, energy security is both precarious and vitally important—energy (literally) drives the global economy.
Unfortunately, the green energy industry’s appetite for critical mineral resources has the potential to increase Western reliance on our adversaries even further. China has already begun to use its supply chain leverage to impede U.S. solar energy progress by limiting the export of key solar components. That’s why Washington needs to lead a responsive coalition of democratic countries capable of independently producing green technologies, components, and extracting key resources.
Like lithium, cobalt is an essential mineral for the compact and efficient batteries found in a variety of electronics, from cell phones and electric cars to fighter jets and industrial-grade magnets.
Cobalt deposits are largely concentrated in the Democratic Republic of the Congo (DRC). For many years, U.S. companies had significant stakes in cobalt mines in the country. But those were sold off by 2020, with no objection from Washington. As the U.S. moved out, China moved in. Today, China owns or co-owns 15 of the DRC’s 19 cobalt mining operations—accounting for most of the world’s cobalt. Beijing also refines 95 percent of the world’s cobalt supply.
Beijing’s success was facilitated by Washington’s limited engagement and oversight (until recently), as U.S. companies sold off stakes in mining sites in the DRC. In 2016, the American company Freeport-McMoRan sold a 56 percent stake in the DRC’s Tenke Fungurume mining site to China Molybdenum. The stake was increased to 80 percent in 2019. In 2020, Freeport-McMoRan sold its 95 percent stake in the even larger Kisanfu mining site to the same Chinese company.
Cobalt’s past could foreshadow lithium’s future. Without U.S. leadership, Beijing may lock up supplies of another critical mineral. To prevent this from happening, Washington should approach the nations of the Lithium Triangle as potential partners, not merely sources of raw materials. Whereas Beijing wants the lithium for itself, the United States and its allies can help Argentina, Bolivia, and Chile develop their own green energy industries so they can actively compete with China on refining and battery production.
One model for this approach is the Minerals Security Partnership (MSP), a multilateral cooperation initiative around critical minerals, sometimes called the “metallic NATO.” MSP partners include Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom, United States, and the European Union. Including key Latin American partners in this alliance should be an obvious next step to bringing purchasing power and investment where they’re needed most while avoiding competition among democratically aligned countries.
The United States should also begin a broader engagement throughout Latin America on developing Western Hemisphere solutions to green energy supply needs beyond mineral extraction. Targeted partnerships and investments could help Latin America develop industries to build solar panel components, EV batteries, offshore energy technology, and biofuels. Tesla’s recent decision to build a manufacturing plant in Mexico could be the start of a regional green technology supply infrastructure that goes all the way from the mine to the final assembly line.
By treating Latin America like a true energy partner, rather than an extractive opportunity, the United States can show that sustainable and transparent development are superior to China’s exploitative model. If it fails to seize this opportunity, the U.S. risks losing its best chance to control its energy future and help Latin America do the same.
Elaine Dezenski is the senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies.
Source: News Week
