Editors Note: This is part of an essay for a University of Oregon Human Geography Class in which I was tasked with following an object and describing its connections behind it.
The Tesla model 3 has the fastest acceleration of any production car in the world. Elon Musk, the celebrity billionaire behind Tesla is constantly in the news grabbing headlines. However, the popular press often overlooks the global institutional and political battle emerging over the lithium mines.
As demand continues to grow for electric vehicles, lithium is becoming increasingly scarce and, as a result, prices are beginning to rise (Fernández 2016). Emerging and existing superpowers such as China and the United States are preparing for what they predict to be the next major move in energy by buying or securing access to mines in other countries. The spheres of influence of these two superpowers are proving to greatly affect the geopolitical outcomes made by countries where these mines are located. The emerging diplomatic and economic tensions affect the geopolitics of lithium extraction. If lithium follows the historical pattern of other highly demanded resources it will result in the exertion of hard power by China in order to gain more access and possible control of strategically important resources such as lithium. This will be proven by a case study of how the Chinese government is using a program called the One Belt One Road Initiative to exert hard power in order to gain access of lithium mines. We will also explore China’s growing sphere of influence in the region due to recent land grabs.
Background
Lithium is a soft silver metal. It makes up most of the lithium ion battery. Historically consumers electronics such as phones and laptops were the biggest consumers of lithium. However, increasingly lithium demand is soaring as electric cars become more popular and require much more lithium than consumer electronics ever needed. According to Alejandro Bucher, Spokesperson for Chile’s SQM lithium mine, said in a recent interview with Bloomberg, “a standard cell phone battery uses about a spoonful of lithium while a electric car battery uses 10-15 kilos.” The three largest lithium producing countries are Chile, Australia and Argentina, according to Balance. Chile will remain the dominant lithium producer as they have the lowest production by far of any other country (Sanderson 2016). To further explore the growing influence of China in lithium extraction we will use the largest lithium mine in Chile, SQM, as a case study.
China recently bought a large portion of SQM’s mine, according to US Department of Energy, this now brings their control to over 50 percent of the world’s lithium supply. This comes one year after the Chinese government announced that they would be banning gas powered vehicle sales in the near future (Guardian 2017). The purchase was contested by Chile’s government as being harmful to competition (Reuters). This opposition to the Chinese takeover of SQM lead China to threaten yanking billions of potential future investment in the region (SPR 2016).
Extraction at SQM entails injecting water into underground mines that are rich in lithium. This brine, as it is called, is then pumped up to the surface where it evaporates in a series of ponds. Workers remove unwanted chemicals from the pond as the brine moves to the next evaporation pond (Balance 2015). After all the water has evaporated the lithium is then loaded onto massive trucks, and it begins its journey to China. After a long drive down Chile’s barren highway the truck pulls into the Port of Valparaiso where it is then loaded and shipped on a container ship. That port is having its capacity expanded, thanks to Chinese government investment (Globalisation 2014).
Literature Review
Geopolitics of Resources
Resource use tends to follow laws or historical rules, as documented by John Rennie Short in his textbook Human Geography 2018. The first of which is that resources only become resources because other resources either become scare, expensive or depleted. Resource use creates new geographies such as the glamorous city of Dubai in the UAE which was funded and developed by government oil revenues. The next is that resource use tends to have larger social and political consequences such as the war in Iraq or the the U.S support of authoritarian governments. All resource use has implications for public spaces, private companies and the wider public such as the harmful effects pollution has on health. Finally attempts to regulate the industry always comes up upon powerful interests that oppose any regulation (G. Luft). Resource wars are not new. Since the industrial revolution the world has been powered first by wood than coal then oil and now soon electric batteries.
Hard vs Soft Power
Soft power is the ability to get other nations to want what they want by appealing and attracting them, according to Joseph Nye in his book Bound to Lead: The Changing Nature of American Power. The relationship between the two nations is voluntary and not forced. A forced relationship would be considered hard power. Hard power usually relies on military or economic coercion to achieve desired outcomes. Soft power is generally viewed as favorable to hard power (Nye 1990). Nye said that, “Seduction is always more effective than coercion, and many values like democracy, human rights, and individual opportunities are deeply seductive.” Another explanation as to how other countries influence each other, as described in Niall Ferguson’s book Colossus, would be economic incentives and force which essentially can be grouped under hard power because of its reliance on coercion.
Historical Scarce Resources For Spheres of Influence
To better understand what is driving China’s desire for access and control of lithium mines we will look at the historical example of another strategically significant resource: oil. Henry Kissinger once said, “control energy and you control the nations,” and for the last century oil has powered the world. Without it economies have stalled and chaos ensued. For example, in 1973, the commodity cartel called the Organization of Arab Petroleum Exporting Countries (OPEC), a transnational cartel of oil producers, started an oil embargo against the United States for military action it took in support of Israel. As a result, massive stagflation occured in the US which began to sink its economy. This situation clearly demonstrated how nations are vulnerable to scarce resources. After this incident, security analysts began linking national security with the constant uninterrupted flow of oil (M. Chaudry).
Findings and Discussion
China is gaining tremendous control and access to lithium thanks to their multi-pronged strategy that includes utilizing large economic incentives. For example, their One Belt One Road Initiative has invested billions of dollars in infrastructure projects around the world to increase their access to goods and resources for their exploding population. In South America, China has invested $22 billion in infrastructure projects (SCMP). Trade in general has also tremendously increased. “Since the free trade agreement between our countries was established in 2005, total cargo through [Chile’s] port has increased from 5.8 million tons in the first year to more than 11 million tons in 2014,” said Gonzalo Davagnino general manager of Chile’s Port of Valparaiso to a reporter at the South China Post news.
The investment’s and bilateral agreements have put Chile in a precarious position. While they want Chinese investment, they also want to maintain their sovereignty which is becoming more and more difficult. When China decided to buy 32 percent of SQM’s mine, the Chilean government filed an antitrust motion in the courts trying to block the acquisition, according to the FT. But the Chinese government is threatening to block future investments in the country just as recently elected Chilean President Sebastián Piñera has promised to cut red tape and increase foreign investment (FT 2018).
While China has exerted economic hard power by threatening to yank investment, they are using it to set up military bases in order to be able to in the future enact military hard power. The One Belt One Road (OBOR) Initiative has already proved to be a lucrative way to increase China’s foreign military presence. According to Foreign Policy magazine, across the world the Chinese government have given infrastructure loans to financially risky countries. When that country comes back to China to renegotiate the loan terms China includes military control as a concession. For example, Frank O’Donnell a Fellow at the Harvard Kennedy School wrote in Axios that rising debt in Sri Lanka forced Colombo to grant China a 99 year lease of their port and a security guarantee which allowed China to establish a military base with their Navy ships patrolling the coast. China’s investment and recent agreement with Chile’s Port of Valparaiso has established a large sphere of influence in Latin America. According to the book Logistics and Supply Chains in Emerging Markets, the expansion of Chile’s port has served as an important industrial and transportation hub allowing for access to inland cities in South America. This has helped fuel the increase in Latin American trade from $3.9 billion in 2000 to $86 billion in 2011 (Logistics 32). However, as collateral for the loan China stipulated that default would result in their seizure of that land (Keck 2016).
Lithium and China’s control demonstrates the importance of spheres of influence in world trade. These geopolitical moves have greatly increased China’s dominance as an emerging world power. The investments made by China and the changing landscape of market desires for electric powered vehicles is changing the face of world energy markets. The world may soon be powered by lithium batteries whose production and distribution is overseen by China. As China’s investment program continues its expansion we might see the emergence of what is akin to a non-violent colonization of large portions of territory through defaulted loan. This would surely put China in firm control of both lithium and the port which is needed to export it.
Revisions: I gave more facts and backed up my positions with more data than I had before. This has allowed me to be more precise in the points in which I was trying to make. I have also got rid of a lot of information that did not directly tie to my thesis statement. I also revised my thesis statement slightly to ensure everything was coherent. I tried to ensure that the conclusion was stated in another way as to tie what China is doing on the micro level with lithium and Chile specifically to a broader theme having to relate with macro political geographic concepts.
References
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“Logistics and Supply Chains in Emerging Markets.” Google Books, books.google.com/books?id=V6dbBAAAQBAJ&lpg=PA31&ots=j4ri3WfRf6&dq=port of valparaiso chinese investment&pg=PA34#v=onepage&q=port of valparaiso chinese investment&f=false.
Fernández, J. E. (2008, February 08). Resource Consumption of New Urban Construction in China. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1162/jie.2007.1199
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Keck, Z., Cookson, J. R., Ramani, S., & Bard, A. (n.d.). China’s Secret Landgrab (No, Not in the South China Sea). Retrieved from http://nationalinterest.org/blog/the-buzz/chinas-secret-landgrab-no-not-the-south-china-sea-21296
Lithium availability and future production outlooks. (2013, May 13). Retrieved from https://www.sciencedirect.com/science/article/pii/S0306261913002997
Sanderson, H. (2018, April 26). China warns Chile against blocking $5bn SQM lithium deal. Retrieved from https://www.ft.com/content/238bda20-48b0-11e8-8ee8-cae73aab7ccb
- Chaudry, P. Ekins, K. Ramachandran, A.Shakoor, J. Skea, G. Strbac, et al.Building a resilient UK energy system, working paper 31 March, REF UKERC/WP/ES/2009/023
UK Energy Research Centre, London (2009)
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“SPR Quick Facts and FAQs.” Department of Energy, www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve/spr-quick-facts-and-faqs
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Nye, Joseph S. Bound to Lead: the Changing Nature of American Power. Basic Books, 1990.
Ferguson, N. (2009). Colossus the rise and fall of the American empire. Penguin Books.