Daily Management Review

Chile Falters In Lithium Production , Misses Chance To Jumpstart EV Battery Industry


The chance of the South American national Chile being able to not only woo South Korean electronics giant Samsung and other corporate investors into the country to produce battery parts for electric vehicles in three factories there, it has also lost the opportunity to itself jumpstart its own EV battery industry.
Back in 2018 when the country, the second largest miner of lithium in the world, had made the announcements of the investments, it had also said that it would also guarantee uninterrupted supply of the coveted metal lithium to those companies for a period of nearly three decades at attractive prices. This was a golden opportunity for lithium battery makers because of a dearth of supply of lithium across the world amidst the rising demand for lithium based car batteries for electric vehicles. 
However the country is now failing to fulfill those the promises made to the foreign investors and the companies are not getting lithium in the promised quantities and price, claimed a report from Reuters, based on regulatory filings and internal documents of a state development agency of the country.
The plans for building a battery parts factories was scrapped last week by Chilean chemical company Molymet – without providing any reason or the decision. South Korean steel maker POSCO also had taken a similar decision sometime ago when it announced cancellation of a joint venture with Samsung’s battery unit to set up a Chilean factory. The company had said at that time that it was worried about future supplies of lithium. The report also claimed that the project is now also being reviewed by Samsung.
And work on a promised factory in Chile by China’s Sichuan Fulin Transportation Group Co is yet to begin.,
No comments from any of the companies were available.
The entire plan of Chile was based upon the assumption that Albemarle Corp – the top producer of lithium in the world, would increase production in Chile so that the planned factories could be supplied with the demanded lithium. But technological and regulatory hurdles had hampered the expansion plans of Albemarle. The price of lithium that the battery makers in Chile would pay was the bone of contention between the Chilean government and the US-based lithium miner. Further, lithium hydroxide in Chile – the type of lithium that is needed for battery production such as the ones from POSCO-Samsung, is not produced by the company in Chile. 
And similar to Albemarle, another large player in the lithium mining industry – SQM, has not been able to increase production of the “white gold” in Chile despite growing demand in global markets. Analysts expect that the global demand for lithium would get tripled by 2025. And the Chilean government has also not been able to attract new companies into the country to invest in lithium mining.
Emily Hersh, a managing partner with the Washington, D.C.-based consultancy DCDB group, told Reuters that it would not be easy to displace the roots of the lithium battery makers from Asia as has been shown by the failure of Chile in that effort.
“It’s a big reality check,” Hersh said. “Chile is a powerhouse in the production of battery chemicals. If they can’t do this, everybody needs to pay attention and figure out why.”