Iran’s neighbours are concerned by the Islamic Republic's rising economic influence since the discovery of a huge lithium deposit on Iranian territory that some observers have described as a game-changer, Lebanon’s Al Mayadeen reported on June 10.

Israel, a country particularly concerned by both Iran's improving military technology and potential to become a substantial and influential economic power, is watching closely. The lithium field in the western Hamadan province is thought to be the second largest in the world after a deposit in Chile, containing an estimated 8.5mn tonnes of lithium. That would give Iran control of 10% of the world's known lithium reserves of 89mn tonnes. That has the potential to bolster Iran's economy and mitigate the impact of sanctions. It would also give the Middle East power considerable leverage in the burgeoning electric vehicle (EV) market.

Lithium is a metal that some have dubbed the “new oil” because of its importance in the making of EVs. Iran's lithium discovery could open the way to an “unparalleled geopolitical and economic advantage” for Iran, leading to a “rebalancing of power in the region,” Anat Hochberg-Marom, an independent strategic consultant to government agencies and security institutions, told Israel’s major tabloid newspaper Maariv.

There is in fact a fast-expanding storehouse of mineral reserves that the Islamic Republic is intending to exploit including zinc, copper, salt, coal, iron ore, uranium, lead, gold, bauxite (for aluminium), molybdenum, antimony and sulphur.

All in all, around 7% of global mineral reserves are found in Iran, making it one of the most important mineral producers in the world, though the country, partly because of the sanctions burden it endures, often lacks the required technology to exploit resources fully. Mineral products currently make up no more than 0.6% of Iranian GDP. At current rates, Iran’s mineral reserves are worth $700bn, with value-added estimated at $4 trillion, according to Iranian reports.

Iran announced that its lithium reserves rank as the fourth-largest in the world in April. It plans to start production of lithium within two years, Tasnim reported on March 6 cited an official as saying.

South America still leads the world in lithium deposits by a considerable margin, with Chile home to deposits of 9.2mn tonnes of lithium, or 58% of the global reserves.

China is currently the world's largest market for lithium batteries as EV sales there soar; in the first quarter over 60% of all cars sold in the country were either electric or hybrid modes. In 2021, the global lithium-ion battery market reached 545 GWh, and China accounted for more than half of the total.

Iran's relations with Arab countries such as Saudi Arabia, the United Arab Emirates, Bahrain and Egypt have been improving recently and military exercises with countries like India and Pakistan have raised some alarm for the Israelis. The strengthening strategic relations between Iran and Russia, China and Indonesia, are also a cause of concern for Iran's foes. Large-scale production of lithium would only deepen the ties between Iran and China further and bolster the non-aligned alliance that both Moscow and Beijing are trying to build in competition with the “unipolar” world led by the US.