From Bloomberg
European Union officials are actively developing a plan to provide electric buses to Latin American nations in exchange for access to lithium supplies, seeking to reduce the bloc’s reliance on China for this crucial raw material.
The European Commission, the executive arm of the EU, is engaged in discussions with automakers and governments to establish a private sector consortium that can supply e-buses to Latin America, according to insiders familiar with the plan who wish to remain anonymous due to the confidential nature of the talks. In return, this arrangement will facilitate EU firms’ access to lithium deposits in these resource-rich countries.
This initiative is part of a broader effort among Western economies to safeguard their core industries and counter China’s strong grip on the green energy supply chain. For Latin American countries, the deal would expedite the transition to cleaner public transport and help reduce carbon emissions.
The quid pro quo pact is part of the EU’s 300-billion-euro ($335 billion) Global Gateway plan, which aims to “boost smart, clean, and secure links in digital, energy, and transport sectors” worldwide, as stated on the commission’s website.
The EU has been actively working on an Investment Agenda with its Latin American and Caribbean partners, according to a spokesperson for the commission in an email response, although specific details were not disclosed. This collaboration is intended to advance trade and investments, fostering secure, sustainable, and resilient raw materials value chains for both sides.
The 27-member bloc plans to invest around 10 billion euros in projects across Latin America and the Caribbean, with additional contributions coming from member states bilaterally and the private sector.
The EU’s ambitious green goals heavily rely on securing a significant amount of minerals, including lithium, the demand for which is projected to increase 12 times by 2030 and 20 times by 2050.
“We have to act now and with the highest speed,” said Bernd Schäfer, CEO of EIT RawMaterials, which is co-funded by the EU. “It’s a make or break moment.”
Latin America possesses some of the largest lithium reserves globally, making it a crucial region for the EU’s sustainability objectives.
The commission recently signed an agreement with Argentina to develop “innovative, sustainable, and responsible raw materials value chain projects.” A similar agreement is expected to be signed with Chile next week, according to insiders. Both Chile and Argentina have abundant lithium reserves.
Europe is not alone in its race to secure raw materials for key sectors such as electric vehicles and clean energy. The US recently introduced a bill to create a national strategy for securing supply chains of critical minerals from the Democratic Republic of Congo. Additionally, a US government program granted a $9.2 billion loan to Ford Motor Co. to build battery factories, aiming to help local firms catch up to China in green technologies.
The commission is still in discussions with member states and the industry regarding the specific details of the plan, including how European companies would benefit from participating in the consortium.
Although the entire arrangement may take years to finalize, the significant demand for e-buses in the Latin American region—estimated at around 10,000 over the next few years—makes it appealing to European automakers, according to insiders.
Leaders from the EU, Latin American, and Caribbean nations are expected to discuss Global Gateway investment projects in Brussels early next week. In addition, business leaders and officials will hold a roundtable in the city to discuss critical raw materials and mobility on Monday.
“It is not about buying lithium but about sharing a resource that is scarce and strategic for sustainable mobility,” said Xiana Mendez, Spain’s junior trade minister, in an interview. She added that the EU intends to establish manufacturing operations in these resource-rich countries and not solely extract minerals from them.
“The challenge would be for EU companies to cooperate,” she added. “It would be the first time something like this has been done.”