U.S. Treasury Secretary Janet Yellen recently stated that the United States may significantly increase its imports of minerals from Chile. Chile is the world’s largest copper producer and the second-largest lithium producer, which she highlighted as crucial for the U.S. green transition.
“I can’t give you exact numbers, but I think we’re going to expand our purchases from Chile significantly. We have been discussing this all along,” she said during her visit to Chile.
It’s noteworthy that Chile possesses the world’s largest lithium reserves and is the second-largest producer of lithium, following Australia. Given lithium’s key role in the global “electrification” transition, analysts predict that the global demand for Chilean lithium could double by 2030.
Some media comments suggest that Yellen’s visit to Chile is actually part of expanding the U.S. “circle of friends” strategy, aiming to diversify the U.S. supply chain by strengthening relations with key partners like Chile. The metal lithium is critical to the Biden administration’s vision for electric vehicles.
To secure a larger share in the electric vehicle industry, the Biden administration is providing substantial subsidies to domestic electric vehicle factories. Meanwhile, it is also encouraging companies to source materials from a broader range of countries, to avoid over-reliance on any single source.
“As we accelerate towards a clean energy future, our solid economic relationship will further strengthen,” she added, “Some of our critical supply chains, including the clean energy supply chain, are currently overly concentrated. This makes the U.S. more susceptible to supply chain shocks.”
To mitigate this risk, the Biden administration has promoted a “friend-shoring” agenda to prevent excessive dependency on the U.S.
As a free trade partner with the U.S. for over two decades, Chile stands to benefit from President Biden’s green stimulus plan, which may increase the demand for its lithium. Trade between the two countries has grown by about 9% annually since 2003.
Lastly, Yellen noted that the lithium mining industry in Chile has a “strong sensitivity” towards environmental issues, and the Chilean government has implemented robust climate policies.
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