Australia, the Lithium Triangle, and the Future of Resource Diplomacy
This article was published in collaboration with the Young Diplomats Society, as part of their Year in Review.
A New Era for Lithium Geopolitics
As global technologies electrify and markets embrace the lucrative opportunities presented by ‘green energies’, lithium has rapidly ascended from a niche industrial input to a ubiquitous critical mineral. Australia is currently the world’s biggest producer of lithium, and the ‘Lithium Triangle’ in South America – a region spanning Argentina, Bolivia, and Chile – has the world’s richest known reserves. Although both regions dominate global supply, a range of geological, political, and economic factors means they are better positioned to operate as partners than as resource rivals.
Australia’s endowment of recoverable critical minerals includes large quantities of hard-rock spodumene lithium. Across the Pacific, the Lithium Triangle hosts vast brine-based reserves that remain largely underdeveloped. This geographic and geological split creates space for both to play distinct and complementary roles. Their potential partnership is further shaped by global pressures: soaring demand for EV batteries, heightened geopolitical competition, and mounting efforts by the United States (U.S.), the European Union (EU), and Japan to diversify away from China’s overwhelming dominance in lithium processing. The recent U.S.–Australia critical minerals deal underscores Australia’s status as a trusted supplier and opens the possibility for Canberra to act as a diplomatic bridge in emerging supply chains, while expanding Australia’s own production.
Framed this way, Australia and the Lithium Triangle should not be seen as competitors, but as partners capable of contributing to more diversified, resilient, non-China-centric lithium supply chains. Political shifts in Argentina, Bolivia, and Chile make this an especially opportune moment to develop ties and accelerate progress on shared projects.
From Competition to Complementarity: Understanding the Two Systems
Australia and the Lithium Triangle have fundamentally different geological endowments. Australia’s abundance of hard-rock spodumene allows relatively rapid extraction, consistent output, and strong energy yields. Despite these benefits, Australia has virtually no local processing industry and relies heavily on shipping raw material to China for processing. The Lithium Triangle, in contrast, holds immense brine-based reserves with far longer resource life. However, these deposits are slower to develop, highly water-intensive, and increasingly dependent on technologies such as direct lithium extraction (DLE).
Rather than encouraging rivalry, these differences create complementarity. Australia provides short-to medium-term reliability and helps meet immediate global demand. The Lithium Triangle holds the long-term reserve depth needed to sustain the energy transition for decades. While Australia cannot match the sheer scale of South American reserves, it brings governance stability, strong regulatory settings, and established investment frameworks, all of which appeal to Western firms seeking certainty.
Together, these strengths create the basis for a multi-pillar partnership in which mining, refining, technology transfer, ESG standards, and investment capital circulate across the Pacific rather than competing head-to-head.
Supply-Chain Diversification and the Geopolitics of Critical Minerals
The case for partnership sits within a broader geopolitical landscape. China dominates almost every stage of the lithium supply chain: roughly 70% of global processing, 75% of cathode manufacturing, and over 80% of battery cell production.
In addition to its dominance across global lithium production, China holds major stakes in both Australian projects (e.g., Pilbara Minerals, Greenbushes) and South American brine fields, including Chile’s SQM, multiple Argentine ventures, and Bolivia’s early partnerships.
This concentration reinforces why diversification is now a central policy objective for Western economies. Large volumes of lithium carbonate and hydroxide are refined far from extraction sites, deepening dependencies and making supply chains vulnerable to political shocks.
Western Push for Diversification
In addition to the U.S.–Australia critical minerals partnership, several major policy initiatives are steering global investment toward more secure suppliers. These include the U.S. Inflation Reduction Act, the EU Critical Raw Materials Act, and concerted efforts by Japan and South Korea to identify dependable long-term partners. Together, these frameworks incentivise cooperation rather than competition between Australia and the Lithium Triangle, since both are needed to meet rising demand while reducing systemic reliance on China.
As the U.S. and other Western powers scramble to secure consistent sources of lithium and other critical minerals, Australia’s credibility as a trusted, allied producer positions it as a central node in these diversification efforts. The trust–critical minerals financing partnership is not only designed to increase its production but also to help allies shape ethical, transparent, and resilient supply networks. This opens space for Canberra to engage in diplomacy and deepen ties with Buenos Aires, La Paz, and Santiago around shared interests in clean energy, mining governance, and supply-chain visibility.
Politics in the Lithium Triangle: New Openness, Persistent Constraints
Argentina remains broadly open to foreign investment under the Milei government, continuing its long-standing investor-friendly posture. With a stable regulatory environment for mining firms, Argentina presents the clearest immediate opportunities for Australian partnership – building on the Allkem–Livent precedent. Nonetheless, infrastructure deficits, exchange-rate volatility, and local water-governance disputes remain significant obstacles.
Chile continues to follow a slow but steady state-guided model. The Boric government’s “National Lithium Strategy” seeks to grow private investment while strengthening state participation. Although reform is gradual, Chile remains the region’s most technologically advanced and institutionally stable producer, making it well-suited to collaborative refining ventures with Australia. High environmental standards and predictable regulation also attract Western partners. While the upcoming election between Jeanette Jara and José Antonio Kast introduces some uncertainty, Chile’s institutional strength means drastic shifts are unlikely.
Bolivia holds the world’s largest identified lithium resources, but has negligible commercial output. The election of President Rodrigo Paz signals a political reset: renewed openness to diversified investment, efforts to balance earlier China-leaning agreements and an ambition to turn lithium into a development engine. Significant hurdles persist, including community consent, strong state control over the sector, and uncertainty around DLE scalability. Even so, the shift creates an opening for quiet Australian engagement and technical cooperation.
The Partnership Model: How Australia Can Contribute
A credible partnership model must integrate geopolitics, domestic political conditions, and industrial capacity, enabling Australia to contribute through technology, standards, and trusted relationships. Australia can support the Lithium Triangle in refining, chemical conversion, and DLE research, areas where it has growing capabilities and where South American producers seek greater independence from Chinese technologies.
Australian governance experience is valuable in areas such as water stewardship, Indigenous consultation, and environmental compliance. Joint work on transparent, high-ESG supply chains aligns with the demands of automakers across the U.S., the EU, Japan, and South Korea.
Australia’s cooperation with the U.S. provides a platform for engaging Argentina, Chile, and eventually Bolivia in Western-aligned mineral supply chains. This could include trilateral dialogues, technical training programs or shared certification systems.
Australian mining companies and public financing bodies can partner with South American governments and private firms. Such arrangements help reduce China’s ability to dominate individual markets by offering credible alternative investment models, with examples already emerging through business chambers such as the Australia-Latin American Business Council (ALABC).
A Moment of Alignment
As the world accelerates towards decarbonisation, lithium’s strategic importance will continue to rise. Australia and the Lithium Triangle are uniquely positioned to underpin a more diversified, resilient, and ethically governed supply chain. With new political openings – particularly in Bolivia – and strong Western demand for aligned suppliers, the opportunity for deeper resource diplomacy between Australia and the Lithium Triangle is present. Given leadership and a willingness to collaborate, Australia and its cross-Pacific partners are primed to create a supply chain that supports global energy transition goals without replicating extractive, insecure, or geopolitically brittle models.
Content Disclaimer
The views expressed in this article are those of the author and do not necessarily represent the views or opinions of the Australia Latam Emerging Leaders Dialogue.
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https://www.csiro.au/en/news/all/articles/2025/march/spodumene-australias-lithium-mineral-hero