Lithium Economics

Is this the end of lithium?

Nov 04, 2013

Bolivia and the world have both much to lose with Toyota´s announcement that later this month it will unveil its first mass-produced fuel cell electric car to be introduced into the market in 2015. But this doesn’t necessarily mean the end of lithium in the world.

The Bolivian government has reasons to worry. Since May 2008, it commissioned a group of inexperienced the handling of a subject of enormous strategic importance for the country: lithium. As expected, these officials failed. After almost 5 ½ years of frustrated experimentation and more than 100 million dollars down the tubes, they could not even meet the goals of the first phase of its strategy initially scheduled for November 2009.

As I warned on numerous occasions, in its capacity as holder of the largest identified lithium resources on Earth, Bolivia could not afford to make any mistakes in this case because by doing so it would only send totally negative signals to the market, which would sooner or later end up reacting. And it appears that this is exactly what happened.

In effect, it has just been known that at this year´s Tokyo Motor Show to be held later this month, Toyota, the largest automaker in the world, will unveil the first mass-produced electric vehicle that runs on fuel cells (hydrogen) to be introduced into the market in 2015. This revelation confirms my supposition almost three years ago that the first element of the periodic table was indeed part of the business strategy of the Japanese auto giant.

But is this the end of lithium? Let us first see why the virtual failure of the so-called Bolivian strategy for industrialization of lithium would have much to do with Toyota's decision to bet on a technology alternative to lithium to power their coming electric cars. The explanation is simple.

Due to the dimension of its most strategic resources, Bolivia was the only country able to ensure the initiation and consolidation of the era of electric vehicles, which would have contributed to a final displacement of fossil fuel use from vehicle transportation in the world.

To march towards lithium, the first car manufacturer in the world needed to be assured of an unlimited supply of the metal for a sufficiently long period of time. This was only possible with the timely entry of my country to the lithium market.

Unlike Bolivia – which never understood why Toyota resisted so much to enter the market of all-electric vehicles with lithium-ion batteries - the automotive monster of the country of the rising sun always knew what the Bolivian failure meant for its interests, which eventually forced it to seek other options.

While Toyota will not be remembered for being the first car manufacturer to use fuel cells in the automotive industry, since Hyundai has already done that a few months ago, it is quite likely to go down in history as one of the architects of a new way of doing things. Bolivia, however, will only be recognized as something that simply could have been but was not.

In this sense, it is clear that we are not facing the end of lithium, since there is no reason to believe that the demand for the lightest metal on earth will soon be over; moreover, it is even likely that it will continue to increase in the following years under the critical mass generated by the nearly 500,000 electric vehicles powered by lithium ion batteries that are already circulating in different parts of the world. However, one can think of at least two alarming results from this analysis.

First, that the world lost an invaluable opportunity to definitively displace fossil fuels, the main source of generation of greenhouse gases and proven causes of global warming and climate change - we must not forget that at present about 50 % of hydrogen commercialized in the world is obtained from natural gas derivatives processes and that there is no reason to believe that this could change significantly in the future. Thus, the possibility of initiating and consolidating the electric car era with lithium as the key factor would have faded away paving the way in the following years for the coexistence of many energy technologies for vehicular transportation, none of which capable of seriously challenging the dominance of oil and natural gas (and its derivatives).

And, secondly, that Bolivia squandered the chance to become the next powerhouse of the world, once again delaying its development aspirations and economic empowerment.

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