Battery Chain Puts Lithium’s Green Credentials Under Microscope

(Bloomberg) — A group backed by German car-making giants Daimler AG and Volkswagen AG has started a study into the environmental impact of lithium mining in Chile, the second-largest supplier of the key ingredient in rechargeable batteries.

GIZ, the German development agency running the initiative, is looking into how pumping up lithium-laced brine from beneath the Atacama salt flat is impacting local water supplies and communities. The project will last about two and a half years, a spokeswoman said.

It’s the latest effort by the global battery-supply chain to address growing concern among investors and the general public over the sustainability of industries that will produce the building blocks for the clean-energy transformation.

Albemarle Corp. and Soc. Quimica & Minera de Chile SA are ramping up output in the Atacama, which boasts the world’s largest reserves, in response to a projected tripling of global demand. That’s shining a light on the fragility of desert ecosystems once seen as resilient to the method of pumping up brine into massive evaporation pools.

The salt flat is in one of the driest places on Earth, where copper mines, communities and tourism also compete for water.

“There is a lack of consensus regarding the impacts and risks of lithium mining and other economic activity in the region,” the GIZ spokeswoman said.

The initial phase of the Responsible Lithium Partnership initiative is being funded by Daimler, Volkswagen, BASF SE and Fairphone BV. It will seek input from parties such as copper and lithium producers, indigenous communities and authorities. SQM welcomed the initiative, saying it was aligned with its sustainability vision. Both SQM and Albemarle are working to minimize brine and water use.

The partnership may lack teeth and looks like an attempt to boost supply-chain perceptions from a German auto industry that’s facing its own environmental, social and governance issues, said Alonso Barros, a lawyer who works with communities surrounding Chilean lithium operations.

The study is getting underway at a time of heightened scrutiny for mining companies in Chile, where a new constitution is being drafted that could lead to stricter environmental standards.

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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