Buried in the Andes

Why the World's Largest Lithium Reserve Has Become Washington and Beijing's Most Contested Battleground

On February 4th, United States Vice President JD Vance announced in front of an audience composed of various world leaders the creation of a Critical Minerals Preferential Trade Bloc. While framed as economic cooperation, the initiative reflects a broader structural shift in global geopolitics: the transformation of critical minerals, particularly lithium, into instruments of strategic competition. Lithium is an incredibly important resource. Defined as a “critical mineral”, it is directly quoted by the United States Government as being “a material essential to the economic or national security of the United States.” It is most notably used in lithium-ion batteries, a component which is essential for the creation of electric vehicles, energy infrastructure, and various military systems. Securing stable lithium supply chains has become one of the main priorities for the world's superpowers, its value even earning it the name of “white gold.”

This geopolitical significance becomes particularly evident in South America’s “Lithium Triangle”, a high-altitude area spanning northern Argentina, Chile and southwestern Bolivia that comprises more than 50% of the world's lithium reserve. Factors such as the growing climate crises and the emergence of drone warfare have pushed this white gold into the spotlight, resulting in the triangle’s emergence as a region of pivotal strategic importance for the world’s powers. Through early and coordinated investment, China has consolidated a dominant position in the lithium market, including holding stakes in mines abroad and controlling a dominant share of global lithium refining and battery manufacturing. Much of the Lithium Triangle’s output ultimately flows east: China is the principal destination for exports from all three countries, reinforcing its central role in the global battery economy. Over the past 20 years, China has rapidly expanded its footprint in both Central and South America. Its investment in projects such as the Belt and Road Initiative has further helped the PRC overtake the U.S. as South America’s main trade partner. The result is China having an effective chokehold on the world’s lithium supply, leaving countries such as the United States in a dependent relationship that worries Washington policymakers.

Additionally, rising geopolitical tensions that followed the first year of the Trump administration have paved the way for a return to hemisphere-based strategies reminiscent of earlier sphere-of-influence doctrines. As the U.S.-China rivalry hardens, Latin America has become one of the central theatres of this conflict, with the U.S. trying to consolidate its economic dominance over the Americas following several decades of Chinese investment in the continent. This is reflected in many ways in the lithium market, and is only exacerbated by lithium’s central role in the energy transition and defense-related technologies. Recent political shifts in parts of the Lithium Triangle, particularly in Bolivia, have further facilitated closer economic and diplomatic engagement with Washington, reinforcing this trend without fully determining it.

Lithium Triangle map; includes Argentina, Bolivia, and Chile - Credits: The Economist

Building the Bottleneck

China can be described as a titan in the lithium industry. When discussing these metrics, economists often divide the battery supply chain into three stages: extraction, processing, and manufacturing. As it currently stands, China holds a near inescapable grip on the processing and manufacturing stages; at the time of writing, it is estimated that China has firm control over 70% of the lithium refinement and battery manufacturing market, a number that has grown steadily over the past decades and does not show any signs of stopping. Furthermore, China leads the production of cathode and anode active materials (CAMs, AAMs), two components essential to battery performance. It is also host to the largest and most numerous battery factories, including dozens of “gigafactories” — massive, highly automated industrial facilities designed to mass-produce goods. When it comes to lithium extraction, China is also among the top contenders. Its own confirmed share accounts for around 10% of the world's lithium reserves, with the Chinese government recently reporting unconfirmed amounts that surpass this.

Finally, despite holding a vast amount of lithium reserves, China is still the world’s largest importer of lithium, as its own reserves are not enough to fund its overwhelming production capacity. In total, it is the biggest importer of global raw and processed battery minerals, being in control of a staggering amount of lithium when combined with its already large reserves. This is where the Lithium triangle shines as a region of great importance: China is the biggest importer of minerals coming from the Lithium Triangle, with UN Comtrade-based WITS data showing that China received 81%, 82%, and 67% of Argentina, Bolivia, and Chile’s lithium carbonate exports, respectively. These numbers roughly account for well over a third of China’s total lithium imports, and these shares are only rising year after year. All in all, these metrics have cemented China as the clear leader in the lithium market, something which is mirrored in its BNEF supply chain ranking, where it currently ranks first. However, this is a position built on a basis of import dependence, and these imports in large part are provided by the Lithium Triangle.

The foundations of China’s battery dominance were laid well before Western governments began worrying about critical minerals. While meaningful investment in lithium processing existed earlier, the real roots behind this are in 2010, when the PRC designated electric vehicles (EV) and advanced batteries as “strategic emerging industries”. This decision led to a substantial increase in state-induced backing and government support in the industry; subsidies, grants, and even land were designated in an effort to make the Chinese EV industry prosper. The measures helped to both increase the production of these vehicles and stimulate internal demand, which incentivized competition and allowed firms to scale properly. In parallel, state-directed Chinese firms such as Ganfeng and Tianqi Lithium started heavily investing in acquisitions overseas, first in the Australian market and then in the Lithium Triangle. Many of these firms have already signed long-term contracts tying up significant portions of the Triangle’s reserves, further immersing the region into the Chinese midstream system.

Combined, these decisions created an ecosystem where the lithium industry could only flourish, government support successfully allowing companies to freely enter the market and invest in research/development, and the overseas acquisitions creating a natural pipeline allowing China to perfect lithium refining and consolidate midstream dominance. 

Additionally, the domestic success of electric vehicles led major companies such as BYD to integrate backward into cathode and anode production, transforming the Chinese industry from battery assembly to refining and producing. In 2015, recognizing this triumph, the government drafted the Made in China 2025 plan. The plan framed the strategic prioritization of EVs and electric batteries as a matter of national importance, with its main focus being the localization of supply chains. This marked the moment China’s dominance was consolidated; under this plan, China’s momentum in its race to command the lithium market was formalized. The goal was no longer merely to assemble batteries, but to control the production and processing stages that underpin them. Securing stable upstream lithium supplies, largely from South America, thus became a structural necessity.

The strategic significance of China’s dominance becomes clearest when viewed through the Lithium Triangle. As previously stated, a large portion of the world’s lithium reserves can be found in the Andes, and historically these minerals have been exported primarily to China. This has developed a relationship of mutual dependency, wherein countries in the triangle are dependent on the PRC to purchase their goods, and in turn the PRC is dependent on South American reserves to supply its refining and battery industry. This relationship, however, is not entirely symmetrical; since processing capabilities are heavily concentrated in China, lithium’s current value is essentially set by the capabilities of Chinese refinement. Because of this, the PRC is able to gain great strategic leverage in the region, something which is exacerbated by the Chinese firms heavily embedded in the Andean infrastructure trying to maintain the status quo.

Chart depicting China’s share in the global mid/downstream supply chain (2024) - Credits: IEA

Late Arrival

Despite not entering the market as early as its Eastern counterpart, lithium has risen over the past decade from commercial obscurity to the center of U.S. industrial and national security planning. Beginning in 2017, amidst growing concerns of U.S. dependency on foreign mineral supplies, President Donald Trump signed an Executive Order (EO) defining what is categorized as a “critical mineral” and pushing related government entities to create “a strategy to reduce the Nation's reliance on critical minerals” and “reduce the Nation's vulnerability to disruptions in the supply of critical minerals.” This EO marked the start of the United States’ prioritization of lithium as a strategic concern and matter of national security, a shift that would get progressively more important in the following years. 

Following the start of U.S.-China trade wars in 2018, prioritization would only increase, as seen with the signing of EO13953 in 2020, which re-emphasized the need to depart from the U.S.’ “undue reliance” on critical minerals. This EO is intriguing, as it declares this dependence as a national emergency, and directly singles out China as the main worry, plainly stating, “Our dependence on one country, the People's Republic of China (China), for multiple critical minerals is particularly concerning.” Regardless, significant government-led progress would not be seen until 2022, when then-President Joe Biden would issue a Presidential Determination invoking the Defense Production Act to strengthen the U.S. domestic industrial base for large-capacity batteries, including lithium. This opened the doors to increased government intervention in the lithium market, signaling a long-term commitment to investors and allowing the flow of federal money to accelerate market growth. 

Additionally, 2022 saw the rise of the term “friend-shoring.” Coined by then-Treasury Secretary Janet Yellen, friend-shoring involves the concept of restructuring global supply chains around trusted partners as opposed to adversarial competitors. In short, this involves a minor shift in U.S. policy wherein it would now not only prioritize expanding its own lithium infrastructure, but also look to replace Chinese supply chains with those of its major trade partners. This is clearly exemplified in the Inflation Reduction Act (IRA) signed in August of 2022, which included an EV tax credit that required a certain percentage (40% at the time of its implementation, later increased) of critical minerals used to be extracted or processed in the United States or countries with a Free Trade Agreement (FTA) with the U.S. — a measure which directly ties consumer and producer interests with the pursued restructuring of supply chains. In the case of the Lithium Triangle, the concept of friend-shoring is particularly relevant as it helps explain why the U.S. is so eager to invest in Andean lithium rather than focus on its own domestic lithium reserves. At the time of the IRA’s signing, Chile, a member of the Lithium Triangle, already had a comprehensive FTA in force with the United States. Moreover, the Triangle nations’ geographic proximity and political fluidity give them great potential as a “friend” region. Nevertheless, the extent of Chinese presence in the region makes it so that, in practice, the concept of friend-shoring in South America will become inherently a competitive policy.

Trump and Kast during 2026 Shield of the Americas Summit - Credits: France 24

In many ways, 2022 and 2023 marked a sharp increase in lithium demand; A widespread boom in EV demand led to a substantial increase in the need for lithium-ion batteries. Furthermore, lithium also became widely sought-after as a catalyst to the energy transition, as referenced in the DOE Critical Materials Report in 2023, with demand amplified by the climate commitments many countries had set for 2030. Moreover, the spark of the Russia-Ukraine war in 2022 not only marked a sharp increase in lithium demand, but highlighted the risks of depending on a geopolitical rival for energy imports. It is also widely regarded as the first demonstration of large-scale drone warfare. Crucially, military-grade drones often require high-level lithium-ion batteries to function, which contributed in stimulating demand. This surge coincided with major deal signings by U.S. firms in the Lithium Triangle, such as General Motors signing a long-term agreement with Livent, happening in this same year.

Another vital turning point for U.S. lithium markets came following President Donald Trump’s victory in the 2024 U.S. Presidential Elections. Until the time of writing, Trump’s administration has marked a meaningful increase in the prioritization of lithium compared to the previous administration. Since Trump has assumed office, many international agreements regarding lithium have been signed, including a framework agreement with Argentina giving the U.S. priority access to critical Argentinian minerals signed in February 2026, and various Memorandums of Understanding (MOUs) with countries inside and outside the Lithium Triangle. A notable example of this is the previously mentioned Critical Minerals Preferential Trade Bloc, which would not only involve the institutionalization of friend-shoring, thus allowing the U.S. easy access to a steady stream of critical minerals, but also threaten to exclude China from the current global market. As of this writing, the effectiveness and outcome of this bloc have not been seen. However, if this bloc were to be successfully implemented, it could completely shift the paradigm of the lithium market.

Irrespectively, China’s commanding position is a matter of great concern to Washington. Historically, the PRC has made good use of its lithium dominance as a tool of political coercion, even using increased export restrictions on lithium-ion battery supply chains as retaliation for President Trump’s tariffs in 2025. These actions have served as proof to Washington of the need to break China’s quasi-monopolistic hold on the market, as they revealed deep vulnerabilities present in current U.S.-China relations. Moreover, the United States’ increased interest in the market can never be fulfilled if China continues to make good use of its control on global lithium reserves. For the U.S. to be competitive in the market, it would require an expansion of its infrastructure and proficiency in the refinement stage. To achieve this goal, the U.S. would have to obtain a great stream of critical minerals; this would entail a substantial increase in lithium imports, which would be unfeasible without increasing investment in the Lithium Triangle. Increasing investment, however, would no doubt lead to competition with Chinese entities given the current power structure, escalating already present tensions in the region. 

Furthermore, the start of the Trump administration has marked a return to hemispheric strategy in the U.S. The recent Operation Absolute Resolve in Venezuela exemplifies how extra-regional influence in the Western Hemisphere is a matter of strategic importance for Washington, echoing the Monroe Doctrine followed in the 19th century. Following the intervention in Venezuela, President Trump publicly stated that "American dominance in the Western Hemisphere will never be questioned again", while also referring to a new framework he names the “Donroe Doctrine.” In this sense, the economic embedding of Andean lithium frameworks to Chinese infrastructure acts as a point of particular political friction, as it directly threatens this ideology. This sentiment has only been inflamed by rising U.S.-China tensions, which further incentivize supply chain diversification. To this end, American investment and subsequent competition in the Lithium Triangle is also a strategic geopolitical choice, as it serves to reassert American dominance in an  area of ever-increasing importance.

The Right Shift

The last decade has marked an era of great political change in South America, following a wave of Presidential elections. Since 2023, the Lithium Triangle has seen a synchronized political shift from left-wing to right-wing political parties. This shift has altered the Triangle’s geopolitical stance, ideologically aligning itself more towards the current Trump administration, which could have a tangible influence on the lithium market.

President Javier Milei’s election in late 2023 marked the first of this sequence of realignment. Milei’s predecessor, President Alberto Fernández, welcomed Chinese investment, allowing their firms to expand their presence in the region. In contrast, throughout his political career, President Milei has unequivocally stated his intentions to pivot Argentina’s foreign policy towards the United States, distancing it from China to the extent that he decided to pull out of BRICS in 2023. In various ways, the recent U.S.-Argentina critical mineral deals can be attributed to this change in direction, with the ideological link serving to incentivize cooperation. Regardless, economic necessity has not allowed Milei to separate Argentina completely from Chinese influence, with firms such as Ganfeng continuing to purchase large stakes in Argentine projects. Furthermore, even the recent U.S.-Argentine deal does not automatically cement a strong American position in Argentine mines, as the Argentine Foreign Minister, Pablo Quirno, clarified following the deal’s announcement that “[it] does not imply that China cannot participate or will not participate in investments in Argentina.”

The 2025 Presidential Elections in Chile resulted in the victory of conservative politician José Antonio Kast. The previous administration led by President Boric was responsible for the “National Lithium Strategy”, which increased state control of lithium reserves through the collaboration of state-led companies such as Codelco. During his campaign, Kast has openly criticized this plan, stating it is investment-stifling and creates significant uncertainty for the U.S. and other Western companies operating in Chile. Additionally, Kast has promised to open lithium to private investment by increasing private partnerships and implementing reforms to increase efficiency, though their success remains to be seen. 

Following two decades of socialist rule, centre-right senator Rodrigo Paz claimed victory in the 2025 Presidential Elections in Bolivia. Despite being a lot more neutral ideologically, President Paz’ election is arguably the greatest shift of the three countries in the Lithium Triangle. Bolivia has historically been heavily aligned with China and Russia, whilst simultaneously being hostile towards the United States. Additionally, it has a long history of protectionist ideology, something which has expanded to even the lithium sector. Conversely, President Paz quickly moved to re-establish diplomatic ties with the U.S. following his assumption of office in November, 2025. Moreover, his political slogan during his campaign, “Capitalism for All”, directly challenges this protectionist ideology, alluding to an increase in private investment in the lithium market. Despite its great reserves, Bolivia currently contributes negligibly to global supply due to its high extraction cost and logistical difficulty compared to other regions. Current foreign investment in this sector is dominated by Russia and China, in contracts that the current administration claimed were exploitative, but will be followed regardless. Looking forward, President Paz has claimed that he will implement reforms to incentivize Western foreign investment, in an effort to restabilize Bolivia’s economy using lithium as a base.

Argentine President Javier Milei and Bolivian President Rodrigo Paz - Credits: Wikimedia Commons

These three political shifts have given the Trump administration a foothold in advancing U.S. investment in the Lithium Triangle. However, they do not automatically signal that the United States will be the future major player in Andean lithium. While ideological alignment increases the incentives for these countries to cooperate economically with Washington, continued Chinese investment demonstrates that economic motivations ultimately still play the bigger role when making decisions. Caught in the middle, South American leaders are now leveraging geopolitical competition in an effort to extract the greatest amount of gain possible.

Who Will Win the Triangle

The evolution of the Lithium Triangle over the past decade suggests that neither political alignment nor structural dominance alone will fully determine the outcome of the U.S.-China competition in the region. While the United States has made meaningful progress towards their goal of regional control, China has been able to maintain its dominance not only in the Lithium Triangle, but the wider lithium market as a whole. Despite this, Washington’s use of political leverage has grown to become a credible challenger to Beijing’s commanding position, with advancements such as the Critical Minerals Preferential Trade Bloc threatening to destabilize China’s current market architecture. Regardless of diplomatic realignment, the United States will not be able to free itself from its dependence on Chinese lithium processing if it does not obtain the necessary foundation to build a credible supply chain: processing infrastructure, refining capacity, technology transfer, and long-term investment frameworks are all vital requirements that take years to build and cannot be conjured by executive order or bilateral agreement alone. Equally, South American governments must continue to navigate between both powers, prioritising economic benefit over ideological congruence, meaning neither side can assume political alignment will translate into commercial exclusivity. If the U.S. cannot find a way to create a meaningful alternative to Chinese refinement, the Triangle will continue sending an overwhelming majority of its lithium exports towards the East. Closing this gap will require Washington to implement policies that translate diplomatic power into long-term supply chain partnerships with Andean nations, and it is in that theatre, more than any diplomatic one, that the final act of this rivalry will ultimately be decided.

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