Lithium

Lithium is essential for modern battery production, particularly lithium-ion batteries used in electric vehicles (EVs), grid-scale energy storage, and portable electronics. Its lightweight atomic structure and high electrochemical potential make it irreplaceable for high-density energy storage applications. While lithium is indispensable for decarbonization, the current extraction models replicate many of the same environmental and social externalities seen in fossil fuel economies. Without major reforms in extraction practices, recycling innovation, and supply chain governance, the expansion of lithium production could undermine the very sustainability goals it is intended to support.

• Key uses: EV batteries, grid storage, smartphones, laptops
• Physical properties: High energy density, light weight, stable charge/discharge cycling
• Projected demand: Expected to grow over 400% by 2040 (IEA) under clean energy transition scenarios
• Supply concentration: Dominated by Australia (hard rock mining) and the "Lithium Triangle" (Argentina, Bolivia, Chile; brine extraction)
• Australia is the world’s largest lithium producer, primarily through hard rock mining (spodumene extraction). Australia supplies over 50% of the world’s lithium raw material.
• South America's "Lithium Triangle" comprising Argentina, Bolivia, and Chile, holds some of the world’s largest lithium reserves, primarily extracted through brine evaporation methods.
• China dominates lithium chemical processing, refining approximately 60% of the world’s lithium into battery-grade materials, creating a critical midstream supply chain bottleneck.

Environmental and Social Criticisms:

• Water scarcity: Lithium brine extraction in arid regions such as the Atacama Desert (Chile) and Salar de Uyuni (Bolivia) consumes large volumes of freshwater, exacerbating existing water scarcity issues for indigenous communities and ecosystems.

Brine mining can deplete shallow aquifers critical for traditional agriculture and biodiversity maintenance, with poorly understood long-term hydrological impacts.

• Land degradation and ecosystem disruption: Hard rock mining in Australia and China requires significant land clearing, blasting, and chemical processing, leading to habitat loss, soil contamination, and high carbon emissions relative to brine extraction methods.
• Local opposition and social conflict: Indigenous and rural communities in Argentina and Chile have increasingly mobilized against new lithium projects, citing lack of meaningful consultation, environmental degradation, and inequitable distribution of economic benefits.
• Weak recycling infrastructure: Less than 5% of lithium batteries are currently recycled globally, meaning nearly all extracted lithium ends up in landfills or low-grade secondary uses. Closing this recycling gap is essential to long-term resource sustainability but remains technologically and economically challenging.

Geopolitical and Market Risks:

• Supply chain bottlenecks: Concentration of lithium chemical processing in China creates vulnerabilities for battery supply chains, especially as Western governments seek to decouple critical mineral dependencies.
• Resource nationalism: Several countries, including Bolivia and Chile, are exploring moves to nationalize lithium assets or impose tighter export controls, potentially restricting global supply growth and reshaping investment patterns.
• Project delays and permitting risks: New lithium projects face growing delays due to environmental reviews, community opposition, and legal challenges, particularly in regions with stronger environmental regulations like the United States, Canada, and Australia.