Lithium cartelization was supposed to be the next great power play. Argentina, Bolivia, and Chile together account for about 43% of identified global lithium resources[s], and since July 2022, their representatives have discussed forming an OPEC-style bloc at forums like the Community of Latin American and Caribbean States[s]. The logic seemed obvious: coordinate supply, set prices, and capture the value of a metal critical to electric vehicles and energy storage. It has not worked. And the reason reveals something important about where the real energy bottleneck lies.
Why lithium cartelization collapsed before it started
The odds of a formal lithium cartel have “almost evaporated,” according to Diego von Vacano, a political science professor at Texas A&M University’s Bush School of Government[s]. The problem is straightforward: the three countries cannot agree on how to manage their own resources, let alone coordinate with each other.
Bolivia, which has an estimated 23 million tonnes of identified lithium resources[s], has pursued a state-led model. After selecting CBC in January 2023, it signed a formal $1 billion contract with the Chinese consortium in November 2024 for two direct lithium extraction plants with combined planned output of 35,000 tonnes per year[s]. The contract required legislative approval and subsequently stalled there[s], and a separate agreement with Russia’s Uranium One Group drew fierce public opposition. Analysis by Bolivia’s Fundacion Milenio found the Russian contract would require Bolivia to repay all construction costs while the Russian firm retained ownership and marketing rights[s].
Chile, the world’s second largest lithium producer, has taken a different path. On April 20, 2023, President Gabriel Boric announced the National Lithium Strategy, proposing public-private projects under state control with Codelco and ENAMI assigned central initial roles[s].
Argentina, under President Javier Milei, went the opposite direction entirely. In May 2025, the government approved Rio Tinto’s $2.5 billion Rincon lithium project, the first mining project under the new RIGI investment incentive regime, which offers tax breaks, customs advantages, and access to international arbitration[s].
A socialist state-led model, a social-democratic nationalization program, and a libertarian free-market regime: these three approaches are fundamentally incompatible. Lithium cartelization requires the kind of shared strategic vision that OPEC’s founding members had in 1960. The Lithium Triangle has the opposite.
The bottleneck that matters: refining, not reserves
While the lithium cartelization debate focuses on who owns the raw material, the more consequential chokepoint sits downstream. China is the leading refiner for 19 out of 20 important strategic minerals, with an average market share of 70%[s]. For lithium specifically, China processes 60 to 70% of the global supply and produces about 75% of battery cells[s]. By 2035, it is projected to supply over 60% of refined lithium[s].
China processes most of the world’s lithium and dominates several later battery-production stages, so much of any expanded Lithium Triangle output may enter Chinese-controlled supply chains. But the material is not inherently required to pass through Chinese refineries. Owning the ore is not the same as controlling the supply chain.
China’s export-control capacity changes the game
On October 9, 2025, China’s Ministry of Commerce announced sweeping export controls on lithium-ion battery supply chains, covering battery cells, cathode precursors, anode materials, and production equipment[s]. China dominates the midstream and downstream battery supply chain, with shares of 80% or more in key segments and near-monopoly positions (95% and above) in precursor cathode and lithium iron phosphate cathode materials[s].
The October package included rare-earth-focused extraterritorial rules for specified foreign-made items, not a general license requirement for every foreign product using Chinese battery inputs[s]. On November 7, 2025, China suspended the six October announcements through November 10, 2026, so those requirements were not in force when this article was published[s]. Earlier controls, including parts of the April 2025 rare-earth regime, were separate.
In practical terms, Beijing has achieved something that lithium cartelization never could: unilateral control over a critical chokepoint in the global battery supply chain.
What this means for the energy transition
Lithium demand rose nearly 30% in 2024, far exceeding the 10% annual growth rate of the previous decade[s]. Despite a price crash of over 80% from the 2022 peak, the market is tightening. Fastmarkets projects the lithium market will swing from a 10,000-tonne oversupply in 2025 to a 1,500-tonne deficit in 2026[s].
The combination of rising demand, concentrated refining capacity, and politically motivated export controls creates a vulnerability that raw resource abundance cannot solve. The United States and European Union have both launched programs to diversify supply chains, but neither has matched the scale of China’s investment[s].
The failure of lithium cartelization is, paradoxically, good news for consumers in the short term: no cartel means no artificial price inflation. But it also means no coordinated counterweight to the country that already dominates the supply chain. The next energy bottleneck will not come from the ground. It will come from the refinery, the export license office, and the trade negotiation table.
Lithium cartelization has been a recurring proposal since at least July 2022, when representatives from Argentina, Chile, and Bolivia discussed forming an OPEC-style producers’ bloc at the Community of Latin American and Caribbean States (CELAC) conference in Buenos Aires[s]. The Lithium Triangle accounts for about 43% of identified global lithium resources[s], a substantial concentration that has nevertheless failed to produce coordinated policy. By early 2025, the prospect had effectively collapsed, and the reasons illuminate a structural problem in critical mineral governance.
Three models, zero convergence on lithium cartelization
The Lithium Triangle’s three members have adopted mutually incompatible resource governance frameworks, making coordinated lithium cartelization structurally impossible.
Bolivia has an estimated 23 million tonnes of identified lithium resources[s], concentrated in the Uyuni and Coipasa salt flats. The Arce government pursued a state-led model, selecting the Hong Kong CBC consortium (CATL, Brunp, CMOC) and entering a preliminary arrangement in January 2023[s]. A formal $1 billion contract for two direct lithium extraction (DLE) plants with combined planned output of 35,000 tonnes of lithium carbonate per year was signed on November 26, 2024[s]; it subsequently stalled in the legislature[s]. A parallel deal with Russia’s Uranium One Group was partially approved in August 2025, five days before Bolivia’s presidential election, but a court subsequently ordered suspension pending environmental impact assessments and Indigenous consultation[s]. Analysis by Fundacion Milenio revealed that the Uranium One contract required Bolivia to repay all construction costs while the Russian firm retained plant ownership and all marketing rights, effectively eliminating financial risk for the investor while concentrating it on the state[s].
Chile, the world’s second-largest lithium producer (approximately 49,000 tonnes in 2024), moved toward partial nationalization. On April 20, 2023, President Boric announced the National Lithium Strategy, proposing public-private projects under state control and assigning central initial roles to Codelco and ENAMI[s]. Existing contracts with SQM (expiring 2030) and Albemarle (expiring 2043) remain intact[s]. Chile also began negotiating governance participation with Indigenous Atacameno communities, a first for its lithium sector.
Argentina adopted the opposite approach under President Milei. In May 2025, the government approved Rio Tinto’s $2.5 billion Rincon lithium project under the RIGI incentive regime, offering tax and customs advantages with international arbitration access[s]. Argentina forecasts a 75% production increase to 130,800 tonnes of lithium carbonate equivalent in 2025[s].
China’s refining monopoly: the actual chokepoint
The lithium cartelization debate has focused on upstream resource control, but the binding constraint sits downstream. The IEA’s Global Critical Minerals Outlook 2025 documented that China is the leading refiner for 19 out of 20 strategic minerals, with an average market share of 70%[s]. For lithium, China processes 60 to 70% of global supply and produces approximately 75% of battery cells[s]. ODI projects China will supply over 60% of refined lithium and cobalt by 2035, around 80% of battery-grade graphite and rare earth elements, and approximately 70% of battery-grade manganese[s].
This concentration creates structural dependency. Even if the Lithium Triangle tripled extraction, much of the output could enter Chinese-controlled supply chains because China processes most lithium and dominates later battery-production stages. A substantial minority is processed elsewhere, so Chinese refining is not a universal requirement. The supply chain vulnerability is not geological scarcity but processing bottleneck.
October 2025 controls: announced, then suspended
On October 9, 2025, China’s Ministry of Commerce issued six proclamations establishing export controls on rare earth materials, lithium batteries, and superhard materials[s]. The battery controls were scheduled to take effect on November 8 and cover lithium-ion cells and packs, cathode precursors, LFP cathode materials, and production equipment.
The package also proposed licensing from December 1 for specified foreign-made rare-earth items containing at least 0.1% Chinese-origin rare-earth inputs by value, and for listed items made with specified Chinese rare-earth technologies; it did not apply that rule generally to all battery products[s]. On November 7, China suspended the six October announcements through November 10, 2026[s].
China dominates battery midstream and downstream supply chains with 80%+ market share across key segments, reaching 95% and above in precursor cathode materials and LFP cathode materials[s]. This concentration gives Beijing substantial leverage over global battery production, even though the October package was not active when this article was published.
Market dynamics and supply-demand inflection
Lithium demand grew nearly 30% in 2024, driven primarily by electric vehicles and energy storage systems, with the energy sector accounting for 85% of total demand growth for battery metals over the past two years[s]. Prices collapsed over 80% from their 2022 peak, returning to pre-pandemic levels. Yet the market is approaching an inflection point: Fastmarkets projects oversupply narrowing to 10,000 tonnes in 2025 before flipping to a 1,500-tonne deficit in 2026[s].
Investment in critical mineral development slowed in 2024, with spending rising just 5% (2% in real terms), down from 14% the previous year[s]. Low prices are not providing the signal to invest, and projects involving new market entrants have been most affected. This creates a scenario where supply tightens just as geopolitical friction increases.
The structural lesson
The failure of lithium cartelization reveals a broader pattern. In critical mineral supply chains, upstream resource ownership is necessary but insufficient for market power. The binding constraint is midstream processing and refining capacity, where China has spent decades building dominance. The U.S. and EU diversification strategies, including the One Big Beautiful Bill’s $2 billion National Defense Stockpile allocation and the EU’s RESourceEU Action Plan targeting up to EUR 3 billion by 2029[s], remain orders of magnitude below what closing the refining gap requires.
The geopolitical risk in lithium is real, but it does not originate where the cartelization debate assumed. It originates in the country that processes the ore, manufactures the batteries, and has demonstrated a willingness to assert extraterritorial rules, even though the October 2025 package was suspended before taking effect. The bottleneck is not geological. It is, and will remain, political.
