© Reuters. FILE PHOTO: U.S. Secretary of the Treasury Janet Yellen looks at Chile’s Finance Minister Mario Marcel (not pictured) while they attend a press conference at the Finance Ministry building in Santiago, Chile, March 1, 2024. REUTERS/Ivan Alvarado/File Photo
Written by Andrea Shalal
LA NEGRA, Chile (Reuters) – U.S. Treasury Secretary Janet Yellen expressed her belief on Saturday that the growing demand for lithium, a crucial element in electric vehicle batteries, would lead to a substantial increase in U.S. imports from Chile in the future.
During her visit to Chile, Yellen visited Albemarle, a U.S. lithium producer based in the northern region of the country, where she concluded her discussions with President Gabriel Boric, Economy Minister Mario Marcel, and various business leaders in Santiago.
After her visit to Albemarle’s site in La Negra, near Antofagasta, she stated that the rising interest in clean energy could potentially create global investment opportunities amounting to $3 trillion by 2050.
Yellen emphasized that strengthening ties between the U.S. and Chile would not only benefit both nations but also enhance energy security and contribute to achieving crucial climate objectives. She highlighted that a key objective of the U.S. Inflation Reduction Act is to reduce reliance on strategic commodities, including critical minerals, from countries like China.
The U.S. aims to expand its domestic production and diversify sources of essential minerals such as lithium required for the operation of electric vehicles.
“We are particularly interested in sourcing minerals from our trading partners, especially countries like Chile that prioritize environmental considerations and have a robust climate agenda,” Yellen remarked.
Yellen suggested that increased purchases of lithium would likely lead to a rise in U.S. imports from Chile and elevate its share of Chilean exports, as China currently stands as Chile’s primary export market.
“While I cannot provide exact figures, I anticipate a significant expansion in our purchases from Chile,” she added.
The visit to Chile forms part of a broader initiative referred to as “friendshoring,” which aims to diversify U.S. supply chains by strengthening relationships with key allies and partners like Chile.
Given Chile’s status as the world’s leading copper producer and second-largest lithium producer, both vital components for the green transition, Washington is keen on enhancing trade relations with Chile.
Enhancing Trade Dynamics
Yellen stated on the previous day that the U.S. seeks to enhance its trade connections with Chile without discouraging its trade activities with China, its largest trading partner, clarifying that it is not a competition.
Highlighting Chile’s significant role in copper production, Yellen emphasized the double-digit increase in demand projected by 2035, owing to the metal’s necessity in various sectors like electric vehicles, offshore wind turbines, and transmission networks.
With Chile holding 30% of the global copper market share and being the top lithium reserves holder, the country also ranks second in lithium production. Given lithium’s crucial role in energy storage, particularly for EV batteries, demand for lithium is anticipated to triple by 2030.
Chile’s longstanding free trade agreement with the U.S. ensures that critical minerals sourced from Chile enable vehicles to qualify for clean vehicle tax credits under the Inflation Reduction Act.
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