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Sweden in search of South American "white gold"

Several governments and car manufacturers, in the expectation of bigger demand for electric cars in the next years, are seeking to become allies of countries such as Chile, Bolivia, and Argentina, the so-called "lithium triangle" in South America

Employees work at a production line of lithium ion batteries inside a factory in Dongguan, Guangdong province, China

Employees work at a production line of lithium-ion batteries inside a factory in Dongguan, Guangdong province, China October 16, 2018/ Reuters/ Joyce Zhou

Reuters | María Cervantes

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Sweden has set its eyes on Peru and other countries with large lithium reserves in South America, in the midst of a global race in which world powers seek to secure supplies of "white gold", necessary for electric vehicles' batteries.

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The Deputy Minister of Foreign Trade of the Scandinavian country, who visited Peru last month, told Reuters in an interview that Swedish companies are interested in lithium and being part of the metal supply chain in the region.

Several governments and car manufacturers, in the expectation of bigger demand for electric cars in the next years, are seeking to become allies of countries such as Chile, Bolivia, and Argentina, the so-called "lithium triangle" in South America.

Peru, the second world copper producer, also expects to enter the market with its own lithium reserves. Last year, Canada's Plateau Energy Metals announced the discovery of 2.5 million tonnes of high-grade ore resources in the southern Andean country, which could become the largest lithium mine in the world.

"What you see in Sweden, Germany, in many countries now is how are we going to obtain all the minerals that are necessary for the future of electrification, which is not only lithium, also copper, which is very important in Peru", said Johansson.

The official added that in the face of Chinese dominance in the rare minerals market it was extremely important to ensure a range of supplies in different parts of the world.

China produces almost two-thirds of the world's lithium batteries and controls the majority of lithium processing plants globally, according to data from Benchmark Minerals Intelligence, which tracks ore prices.

In the region, China's Tianqi Lithium Corp has a significant investment in Chilean mining company SQM. Also, the Xinjiang consortium TBEA Group-Baocheng and Bolivia signed a preliminary agreement this year to form a company that will industrialize lithium reserves.

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Johansson said that China's position in the market could create a risk. "If China is able to control a market (...) that will be a problem," he said.

"If someone has a lot of control of an area, it is not good for (lithium) prices, it's not good for the competition and it also becomes a problem of supplies security," said Johansson.

Sweden's automotive industry includes Volvo cars —controlled by Chinese car giant Geely— and truck manufacturers AB Volvo and Scania.

Europe has taken measures to compete with Asian rivals in the field of electric car batteries: the Swedish Northvolt will start in August the construction of the largest lithium-ion battery plant in the old continent.

Johansson said Swedish firms were also interested in helping develop sustainable mining in the region, a key component for the electric vehicle industry.

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