China’s largest lithium compounds producer, Ganfeng Lithium Co., will acquire Lithea Inc. for $962 million to secure more resources for the production of metals to produce batteries, Reuters reported. Privately owned Lithea Inc. owns rights to lithium salt lakes in Argentina’s mineral rich Salta province.
“There is more and more pressure on the salt lakes themselves, and this is not sufficiently discussed and evaluated,” Pía Marchegiani, director of Environmental Policy at the nongovernmental organization (NGO) Environment and Natural Resources Foundation in Argentina, told Diálogo on July 25. “Not having information and not being able to talk to the company is another problem.”
The deal, according to Reuters, would help the Chinese company strengthen “the design of its upstream lithium resources and its self-sufficiency” as booming interest for electric vehicles drives metal demands higher.
Lithea has salt lake assets at Pozuelos and Pastos Grandes, west of Salta, Bloomberg news network reported. Its first phase of production is expected to have an annual capacity of 30,000 tons of lithium carbonate.
“Chinese companies do not have high environmental standards,” Marchegiani said. “The concern about the growth of these companies is the lack of transparency, the violation of human rights, and the asymmetrical relationship they have with the local communities where their projects are carried out.”
Argentina, Bolivia, and Chile, known as the Lithium Triangle, hold more than 70 percent of the main reserves in easily exploitable and economically profitable salt flats, according to a report from Argentina’s National University of Entre Ríos, Lithium in South America.
The demand for this metal generates enormous pressure from Chinese corporations in the Lithium Triangle for the appropriation, control, and securing of the resource, the Society for Critical Economics of Argentina and Uruguay indicates in its publication Cuadernos de Economía Crítica.
Lithium is used in batteries that power millions of devices such as pacemakers, smart phones, solar plants, and the growing electric car market. It is estimated that by 2050 there will be 70 million electric vehicles worldwide, Mexico’s National Council of Science and Technology indicated.
“Most of the battery manufacturing is in China. Beijing controls 80 to 90 percent of global capacity. This is an extremely dominant position for a country,” Michelle Michot Foss, a fellow in Energy, Minerals, and Materials of the Rice University’s Baker Institute Center for Energy Studies of Houston, Texas, told Voice of America.
Hungry for lithium
Ganfeng has been linked to numerous human rights violations and environmental damage in projects and investments in Latin America a report from the Collective on Chinese Financing and Investments, Human Rights, and the Environment (CICDHA), an NGO that promotes the protection of civil rights in the hemisphere, indicates.
The Chinese company not only seeks to acquire Lithea, but also initiated construction in June of the Mariana lithium project in the Llullaillaco salt flat, in Salta. It is expected to produce 20,000 tons of lithium carbonate per year for export, the U.S.-based platform World Energy Trade reported.
It also has a stake in the Cauchari-Olaroz project, in the Argentine provinces of Jujuy, Salta, and Catamarca, which is scheduled to start operations by end of 2022 and aims to produce 40,000 tons of lithium carbonate per year, Bloomberg reported.
In this project, the company’s environmental impact studies were not carried out with sufficient information to assess the consequences of lithium extraction on ecosystems, according to the CICDHA report. It also violates the right to prior consultation with the affected indigenous peoples.
Furthermore, it extracts more water from the basin than what comes in naturally. The extraction techniques that the Chinese company uses carry a risk of salinization, which could affect access to water, productive activities, and the wild flora and fauna of several indigenous communities.
Chinese companies also seek to increase their operations to industrialize the lithium that Bolivia has in the Uyuni salt flat, one of the largest salt deserts in the world, and to exploit the mineral in the Atacama salt flat in Chile. In 2021, Australia was the largest lithium producer, followed by Chile and Argentina, the German broadcaster DW reported.
“China is coming to these latitudes where lithium is cheaper because there are fewer social and environmental standards, where communities are very isolated, with difficulties to mobilize,” Marchegiani said. “An ideal scenario for Chinese interests.”
“We need the Chinese government to oversee the environmental and social behavior of its companies abroad. We expect them to comply. We don’t expect them to do anything further,” Julia Cuadros, a board member of the NGO CooperAcción Perú, a member of CICDHA, told Diálogo.
“China has a history of using economic interdependence as a weapon,” Benjamin Gedan, deputy director of the Woodrow Wilson Center’s Latin America Program, told Voice of America in June. Tomorrow, possibly Argentina, Bolivia, or Chile “are not going to have direct access to their own lithium [to industrialize it] and will have to go and negotiate with China, with the asymmetry of that power,” Marchegiani concluded.