U.S. Treasury Secretary Janet Yellen anticipates a significant rise in U.S. imports from Chile in the upcoming years, driven by the escalating demand for lithium, a crucial component essential for electric vehicle batteries.
During her visit to Chile, Yellen toured the facilities of U.S. lithium producer Albemarle in northern Chile, concluding her trip that included meetings with President Gabriel Boric, Economy Minister Mario Marcel, and business leaders in Santiago.
Yellen highlighted the potential for expanding U.S.-Chilean relations, emphasizing the mutual benefits that would enhance energy security and contribute to achieving vital climate objectives. She underscored that reducing reliance on strategic goods, including critical minerals from China, is a key objective of the U.S. Inflation Reduction Act.
The Treasury Secretary emphasized the U.S.’s interest in bolstering domestic production and diversifying sources of critical minerals like lithium necessary for powering electric vehicles. Yellen emphasized the importance of sourcing minerals from free trade partners like Chile, known for its environmentally conscious production practices and robust climate agenda.
Yellen expressed confidence that increased lithium purchases would lead to a substantial growth in U.S. imports from Chile, potentially elevating its share of Chilean exports, with China currently serving as Chile’s primary export market.
As part of a broader initiative termed “friendshoring,” aimed at diversifying U.S. supply chains by strengthening ties with key allies such as Chile, Yellen’s visit underscores the strategic importance of fostering collaborative relationships to support sustainable economic and environmental goals.
Chile’s pivotal role as the world’s largest copper producer and the second-largest lithium producer positions it as a crucial contributor to the global green transition. The demand for copper is projected to double by 2035 due to its essential applications in various sectors, including electric vehicles and renewable energy infrastructure.
With a 30% share of the global lithium market and abundant reserves, Chile plays a significant role in lithium production critical for energy storage solutions like electric vehicle batteries. The longstanding free trade agreement between Chile and the United States enables vehicles using critical minerals from Chile to qualify for clean vehicle tax credits under the Inflation Reduction Act, fostering growth in both nations’ industries.
Yellen highlighted Albemarle’s investments in Chile as a testament to the benefits of enhanced cooperation between the two countries. The company’s operations in Chile, employing 1,000 individuals across production sites, exemplify the positive outcomes of expanded economic collaboration.
Anticipating shifts in the medium to long term, Yellen noted upcoming lithium production expansions within the United States, including Albemarle’s planned lithium mine in North Carolina set to commence operations by 2030 and a mining and processing facility in Nevada that initiated construction a year ago.
Yellen acknowledged Chile’s efforts in formulating a new national lithium strategy to ensure a balanced and competitive production landscape without dominance by any single country. While details of the regulatory framework were not disclosed, companies like Albemarle remain optimistic about future prospects in Chile’s lithium sector.