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Abstract
Global warming has driven the historical shift towards clean energy, with lithium playing a crucial role in this green transition and becoming a focal point of global competition. Due to its high performance and widespread application in manufacturing lightweight energy storage batteries, lithium is at the forefront of electrification, which is essential for achieving zero emissions. Latin America, home to over half of the world’s lithium resources, sees an extraordinary opportunity in this monumental transition. Lithium-producing countries in Latin America are currently proposing a lithium OPEC to influence pricing and enhance profitability. This study evaluates the feasibility of such a cartel and examines the challenges using the framework of commodity cartels, analyzing factors such as demand, supply, production, market structure, and synergies. The paper concludes that resource-rich countries in Latin America are correct in their assessment of the prospects for developing their lithium industry amidst the global energy transition. However, the proposal of a lithium OPEC might be too radical given the current production capacity and market influence of the involved countries. Latin America should seek more practical approaches to develop lithium resources through various regional collaborations and the adoption of new technologies.
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References
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