Argentina and Bolivia, two of the three states that make up Latin America’s so-called Lithium Triangle, are due to find out this week if their ambitions to join the BRICS bloc will be realised. 

The two Latin American nations are among up to 40 countries that have expressed an interest in joining the bloc ahead of the BRICS summit in South Africa that started on August 22. 

According to the US Geological Survey (USGS), they occupy first and second place in terms of identified reserves of lithium; Bolivia with 21mn tonnes and Argentina with 20mn tonnes. 

Economic boost 

Mired in its worst economic crisis since the early years of this century, Argentina is understood to be looking to join BRICS — whose membership currently comprises Brazil, Russia, India, China and South Africa — largely to help its struggling economy. Latin America’s second-largest economy after Brazil has been grappling with rampant inflation, a devaluation of the peso and rising unemployment. Only last month, the country secured an urgent deal with the International Monetary Fund to stave off default. 

China is the primary advocate for Argentina’s entry to BRICS block, with Buenos Aires announcing back in July 2022 that it had secured official backing from China. Brazil had previously resisted expansion of the bloc, but President Luiz Inacio Lula da Silva has recently spoken in favour of Argentina’s entry — while not endorsing other aspiring members from the region. Earlier this summer, Brazil also backed Argentina’s membership of the New Development Bank, known as the BRICS bank.

Allowing Argentina would join would expand BRICS’ presence in the southern hemisphere. While on the small side compared to the original four BRIC countries, in terms of both population and the size of its economy, it is comparable to the latest entrant, South Africa. At 45.8mn, Argentina’s population is somewhat smaller than South Africa’s but the two countries’ GDP is very close, and Argentina’s GDP per capita outstrips the African country’s. 

Bolivia, by contrast, is seen as having a slimmer chance of joining the bloc. At $40.4bn, it’s GDP is barely a tenth of either Argentina’s or South Africa’s; its population is a mere 12.8mn; and, GDP per capita comes in at just $3,523. 

Common vision

Nonetheless, in June President Luis Arce Catacora formally announced Bolivia's interest in becoming part of the BRICS, through a letter addressed to the five presidents of the bloc. 

“Bolivia shares a common vision regarding an international order founded on equality, solidarity, inclusion, consensus, beneficial nuclear cooperation and multilateralism, without hegemonies,” Foreign Minister Rogelio Mayta said earlier in August, when confirming Arce’s plans to participate in the summit.

As well as pursuing membership of the bloc, Bolivia is also hoping to showcase its investment potential to some of the world’s biggest economies, as it seeks to attract foreign investments especially to develop its lithium and other natural resources. 

The government very is keen to build its relations with the BRICS nations. Indeed, Mayta confirmed the president’s participation in the summit shortly after Economy Minister Marcelo Montenegro announced that Bolivia is increasing its use of the Chinese yuan in international trade as a viable alternative to the US dollar in order to reduce its reliance on the latter currency in foreign trade.

Bolivia also has warm relations with Russia, in April Mayta and Russian Foreign Minister Sergei Lavrov announced a new trade transaction system aimed at reducing reliance on the US dollar and euro. 

Russia and China eye Latin American lithium

Bolivia is of particular interest to both China and Russia because of its vast reserves of lithium, a crucial component for the production of electric vehicle batteries.

Since the beginning of the year, Bolivia has sealed three significant lithium deals involving two Chinese companies and one Russian firm and a combined $2.8bn in investment commitments.

In the latest development, Bolivia signed lithium agreements with Russian state nuclear firm Rosatom and China’s Citic Guoan Group in June, that envisage a total investment of $1.4bn. This followed a similar agreement in January with giant Chinese battery maker CATL. 

Bolivia possesses the world's largest salt flat, Salar de Uyuni, although until now converting its lithium resources into profitable reserves has been hindered by unfavourable political and investment conditions. 

Argentina, meanwhile, has been seeking to improve its investment climate to attract international companies to the lithium sector, which is firmly in the sights of Chinese companies. 

Following Argentinian Economy Minister Sergio Massa's visit to Shanghai in June, the government outlined a raft of initiatives in the sector by Tibet Summit Resources, Ganfeg Lithium and the Tsingshan Holding Group. There is speculation the country, currently the fourth largest lithium producer, could overtake neighbouring Chile thanks to its strong pipeline of lithium projects. 

Argentina is also of interest to Russia. In November 2021, Uranium One Holding N.V., a Rosatom company, entered into an agreement with Alpha Lithium Corporation to establish a joint venture to develop the Tolillar lithium deposit in Argentina.

However, the Russian invasion of Ukraine and imposition of international sanctions in 2022 disrupted deliveries of lithium carbonate from Chile and Argentina to Russia. At the time, an official at the Russian industry and trade ministry told local media that Bolivia would be key to the country's lithium supply.

White gold

Australia, China and Chile top the list of the world’s biggest producers of lithium, but both Argentina and Bolivia are among the countries with the most substantial reserves of the metal dubbed ‘white gold’. Brazil is another major producer. 

Demand is growing as the metal is a critical component for Li-ion (lithium-ion) batteries. “Global demand for Li-ion batteries is expected to soar over the next decade, with the number of GWh required increasing from about 700 GWh in 2022 to around 4.7 TWh by 2030,” says a January 2023 report from McKinsey & Company. 

“Batteries for mobility applications, such as electric vehicles (EVs), will account for the vast bulk of demand in 2030 — about 4,300 GWh; an unsurprising trend seeing that mobility is growing rapidly." 

That has sparked a scramble to secure access to lithium; in 2022 prices spiked as supply struggled to keep up with soaring demand driven by increased uptake in electric vehicles. 

“As the impacts of climate change ripple across the globe, lithium’s importance as a strategic mineral will increase exponentially to become an essential component for the clean energy systems of the future,” said a report by the Center for Strategic & International Studies (CSIS). 

“[T]he strategic importance of lithium will grow as the world attempts to meet the increasing demand for electric vehicle batteries and clean energy. These trends indicate that control of the lithium industry could reap major benefits in the future, which will likely increase the geopolitical contention between great powers.” 

 

BRICS’ changing role 

The impact of Argentina and potentially Bolivia joining BRICS is as yet unclear. Their entry would gather together four of the top countries in terms of current production and/or reserves — Argentina, Bolivia, Brazil and China — in the grouping. However, this would not give them an OPEC-like ability to control global prices. Not only would Australia and Chile remain outside the group, BRICS is as yet a much looser grouping with disagreements among its five members on precisely what role it should play. 

What its members had in common at the start was that they were big (in terms of population) and developing. Over the last decade an a half, it has evolved into more of a unified geopolitical group. Now, as reported by bne IntelliNews, in light of the geopolitical changes triggered by the war in Ukraine and China’s rivalry with the US, the current summit in South Africa is expected to have at least some emphasis on how its members can shape the future world order.