Chilean President Gabriel Boric's pitch last week to enshrine greater state control over lithium is emerging as the latest test for the resource nationalism embraced by Latin America's ascendant left but which has proven tough to implement in practice.
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While the former student protest leader's proposal to give the government a majority stake in all future lithium projects faces an uncertain path in Congress, its mere introduction shook one of the mining industry's most lucrative corners. The push from Boric also highlights the long-running regional tension between governments' hunger for control of coveted commodities and future profits versus their ongoing need for private sector capital and know-how. "In Chile, it's probably going to be the most significant case," said Carlos Pascual, top energy executive with IHS Markit, referring to other regional efforts to exert more government control over the mineral seen as key to a greener future and citing Chile's outsize role in the global metals market as the world's top producer of copper and No. 2 in lithium.
Last year, Boric's fellow in Mexico, President Andres Manuel Lopez Obrador, enacted a sweeping lithium nationalization and later ordered the creation of a new state-run lithium company, LitioMx, even though the country is still far from selling its first cargo of the ultra-light metal.
Lopez Obrador, who reveres the country's landmark 1938 oil nationalization, justified his policy as its logical extension. He invoked past abuses at the hands of colonial masters and more recent corporate titans, arguing that only the government can prevent exploitation and ensure broadly-distributed benefits.
Lithium is in high demand for rechargeable batteries for future fleets of electric vehicles in the global transition to green energy. Peru, a mining powerhouse best known for copper, might have pursued a similar approach to Boric to bolster its development of lithium had former President Pedro Castillo not been ousted late last year.
The leftist Castillo won a narrow victory in 2021, pledging to nationalize the ultra-light metal along with other minerals including copper, but later moderated his position, leaving the promise unfulfilled. That leaves the exception to the trend, Argentina, as an increasingly likely Latin American destination for new private capital for lithium.
