Lithium and the Green Revolution

The Economist magazine reports on the importance of lithium to the green revolution. Over half of the world’s supply currently comes from Chile, and the government is creating a state-owned company to produce the mineral. Private companies will have to form joint-venture companies in the future with this state-owned company, and the state will have a majority stake. Other Latin American and African countries are planning similar moves. The magazine criticises the current resource nationalism and notes that the nationalisation of companies has had a bad track record in the region, with the companies being mismanaged or corrupt. Extraction of the resources requires know-how, technology, and expertise which is currently unavailable in the region. The trend towards resource nationalism has also affected investment in the industry, as Bolivia (holding the second-largest reserves of lithium) has shown with a decree overturning a planned investment project.

The Economist also reproduces a chart which shows Australia holding a significant amount of lithium reserves, as well as supplies of other critical raw materials for the green revolution. An IMF paper recently estimated that revenues from the extraction of minerals, such as lithium, copper, cobalt and nickel, could rise four-fold because of the increased demand.

At the German Australian Business Council, we shall be looking at the implications for business in the next few months. Sign up for further information.

Lithium export boom in Australia

The value of exports of Australian lithium has boomed in the recent year from AUD 5.2 billion to AUD 18.6 billion, according to figures published by the Office of the Australian Chief Economist.

Global demand for the critical raw mineral is expected to soar in the next few years as the material is used in many advanced products, such as batteries. Australia is one of the world’s key suppliers. Currently, rechargeable batteries use up to 80% of the global demand for lithium and Australia produces 53% of the world’s lithium.

Germany has recently signed agreements with Argentina to improve its supply and we hope that the forthcoming free trade agreement between the European Union and Australia will also encourage trade in raw and processed materials between the trading blocks.

Critical Raw Materials

The Economist magazine reports on the supply of critical raw materials, such as lithium, aluminium and cobalt. Many of these are supplied by countries with unstable governments, such as the Congo, or subject to sanctions, such as Russia.

Over the past few years, mineral resources have been discovered and increasingly exploited in Australia. The country is now becoming one of the suppliers of critical raw materials to industry in Europe, as the Economist highlights.

At the German Australian Business Council, we encourage the development of business relations on both sides of the globes, and we see the supply of critical raw materials as an important factor in strengthening the relations between our two countries.

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