Chile to nationalise it's lithium industry

[DonkeyApple]

https://www.reuters.com/markets/commodities/chiles...

This is quite interesting and it touches on the risk to economies like Germany which I've raised on here during the recent ferver over magical liquids to placate people who have lost their cheap Russian gas and are about to get taxed out of cheap brown coal.

The fight back of developing nations. The simple reality that the colonial era is over and countries like Germany or China can't just go and asset strip a developing nation so easily any more.

Germany's solution to its energy shortage is to import energy for its heavy industry from overseas, wind energy from Chile, solar energy from North Africa via the offering of some coloured beads and blankets. But these nations have learned that the true wealth is in the production using these raw materials as opposed to selling the raw material for export in exchange for a town house in Kensington, school fees, NY apartment and all the jet skis money can buy. There is more money in the use of these materials than even kleptocracy offers.

There is a realisation that the heavy industries that require these resources are up for grabs. Who owns the raw resources determines where the factories are that use them. Why export your lithium and wind energy to countries that are desperate for them to keep their industries viable when you can simply force those industries to shut down in those markets and reopen in yours and generate you £billions?

The big difference today is that other ex colonial powers see an advantage in backing that activity with money and expertise. It's a colonial death match between those with financial services might and those with 20th century industrial might.

I suspect resource nationalisation by developing nations that will propel them in the 21st century to being the new developed nations is going to be a huge geopolitical upheaval that reshapes global economics as renewable energy redefines industry and business as a whole.

I don't think nations such as US, Europe, China or even Russia will find it as easy to strip the resources and domesticate the revenues and profits during the transition to renewable and that the nations with dominant financial services economies will prosper even more heavily than those with legacy industrial bases.

But more immediately, we have a looming and inevitable Lithium shortage. The rate of demand will cross the rate of supply at some point over the next decade just as a function of how many years it takes to bring mining resources to market and the big delay on investing in Lithium resources but one has to wonder if this Chilean plan to nationalise could bring that date forward?

[plfrench]

It’s a fascinating reset of the world order that we’re witnessing with the transition away from fossil fuels to renewables. This is why the UK will be reluctant to move far off course with the zero emissions vehicles mandate; we need to wean our population off fossil fuels for transport and heating ASAP to be ready to capitalise on this new opportunity at a global scale.

With change comes unease and none more so than for those nations so wedded to fossil fuels - there are bound to be more wars unfortunately.

It does make you think our North Sea off shore wind farms make a wonderful target for future wars - I wonder what we’re doing to protect them?

[grumbledoak]

So, another colour revolution or just go straight to the airborne democracy?

[delta0]

They will be turning to Northern European countries for energy security. Nuclear and wind providing electric, green hydrogen and synthetic fuels. As for lithium if it becomes unviable then there are lots of alternatives so those will be used plus any new ones discovered in the meantime.

Edited by delta0 on Tuesday 9th May 08:55

[DonkeyApple]

plfrench said:

It’s a fascinating reset of the world order that we’re witnessing with the transition away from fossil fuels to renewables. This is why the UK will be reluctant to move far off course with the zero emissions vehicles mandate; we need to wean our population off fossil fuels for transport and heating ASAP to be ready to capitalise on this new opportunity at a global scale.

With change comes unease and none more so than for those nations so wedded to fossil fuels - there are bound to be more wars unfortunately.

It does make you think our North Sea off shore wind farms make a wonderful target for future wars - I wonder what we’re doing to protect them?

Yup. It can, in simple terms, be boiled down to the waning of the oil economy and the rise of new geopolitical opportunities driven by new energy.

The loss of Russian energy to Europe has triggered some nations to realise they really can't meet 2050 without massive structural change. In order to electrify industry one needs a secure, constant and most importantly, non fossil fuel based source which has become a huge gulf to breach for some industrial, developed nations.

The U.K. has been handed quite a huge competitive advantage by accident. We de industrialised almost 40 years ago, we've done that crippling transition and managed to do it during eras of high service industry growth. We don't have that dirty, legacy industry to try and prevent leaving for China or to now protect from leaving for where green energy is available. We have nat gas to fall back on which is the cleanest of the fossil fuels, we're surrounded by shallow seas at the Eastern edge of a large ocean, we can trade energy with mainland Europe which is only a few miles away and we have created one of the largest financial services hubs on the planet to facilitate domestic and overseas growth with.

Re energy security, that's a really interesting area as when you look at Europe many of the core renewable nations are outside of the EU. The EU has run an expansionist policy since inception and that core nature will be being diverted to focus on renewable energy, whether south across the Med or now to the North where it will be driven to try and pull the Scandinavian nations in and from the U.K. risk perspective, Scotland. Now the physical expansion of the EU to the East has been halted by Russia there is a lot of expansionist needs that will be diverted to other forms and renewable energy seems somewhat obvious. As such I expect new pressures for the most Northern European nations to join the EU, starting with Scotland as the internal battle for North Sea gas and wind grows.

But going back to the growing desire of developing nations to onshore the more lucrative downstream industrial processes of their raw materials it does pose potential issues for China who have built their economy upon importing cheap raw materials and processing/using them domestically.

But if Chile succeed in nationalising Lithium then it seems inevitable they will nationalise copper and the wind energy. The latter would end HIF and the green hydrogen industrial ambitions for Europe as Chile would be keeping that energy within its borders and forcing industries such as the fertiliser industry to move production and employment to Chile.

[delta0]

Watching this documentary on lithium in Chile https://youtu.be/HSh6EgMwMOY

It suggests that they see lithium mining only really being highly profitable for about 15 years. After this other countries will have ramped up production, recycling of batteries will be significant and alternatives will be entering the market.

[kambites]

delta0 said:

Watching this documentary on lithium in Chile https://youtu.be/HSh6EgMwMOY

It suggests that they see lithium mining only really being highly profitable for about 15 years. After this other countries will have ramped up production, recycling of batteries will be significant and alternatives will be entering the market.

Alternatives are already starting to enter the market, albeit in relatively small quantities at the moment: https://www.electrive.com/2023/04/21/catl-and-byd-...

[GT03ROB]

DonkeyApple said:

But if Chile succeed in nationalising Lithium then it seems inevitable they will nationalise copper and the wind energy. The latter would end HIF and the green hydrogen industrial ambitions for Europe as Chile would be keeping that energy within its borders and forcing industries such as the fertiliser industry to move production and employment to Chile.

That seems bit of a stretch if I'm understanding your correctly. Green hydrogen is or can be made available from other sources not just Chile.

[DonkeyApple]

delta0 said:

Watching this documentary on lithium in Chile https://youtu.be/HSh6EgMwMOY

It suggests that they see lithium mining only really being highly profitable for about 15 years. After this other countries will have ramped up production, recycling of batteries will be significant and alternatives will be entering the market.

I would think that 15 years is too short a time period. It takes around a decade to bring a mining operation to capacity and Li has a longer processing time that adds to this so in 15 years the planned competition will only just be getting towards capacity. Chile is also super cheap in production costs and it adds a huge premium via commission charges which it controls and can play with to maintain price competition.

In 15 years time we will hopefully have worked out how to recycle Li batteries at a lower cost than mining fresh Lithium and assuming we can achieve that goal, 15 years will only have started to see any significant number of EVs being recycled but what we can see from looking at Western car data to date is that while the size of a nation's fleet ebbs and flows with GDP the rate of new car purchases holds generally inline with scrapage rates so in 30-40 years time in a market such as the U.K. where most cars are EVs and the majority of cars being scrapped are now EVs there is an argument that the Li in the U.K. car fleet will generally be entering a state of permanent recycling.

Alternative tech is a clear risk but it's hard to define. For static storage it seems likely that Na will replace Li on cost and safety grounds but it seems less likely in cars without an enormous recharging network, larger than planned, to compensate for the much lower energy density. But tech risk is a big one anyway, arguably not from what we already have functioning in laboratories but from those Black Swan discoveries that weren't predicted and smash an industry. As an aside, this is why we don't want to rush, in the U.K., into battery factories. The market moves very quickly and it seems very unlikely that any local sales would be large enough and quick enough to repay the first investment before the next one is needed for the latest tech. The U.K. is better placed to profit from research and development along with financing than heavily subsidising a few people to do some manual labour in a weak economic region.