Expanding Chile’s lithium value chain: from mining to batteries and recycling

A new ICCT–CMS report outlines a roadmap for Chile to evolve from lithium exporter to regional battery production hub, generating billions in revenue and thousands of clean-tech jobs by 2035.

Chile, the world’s second-largest lithium producer, has the potential to transform its role in the global electric-mobility market by moving beyond raw material exports. A new study by the International Council on Clean Transportation (ICCT) and Centro Movilidad Sostenible (CMS) shows how the country could expand its lithium value chain to include battery and cathode production, as well as recycling, positioning itself as a regional leader in sustainable battery manufacturing.

Surging battery demand

The report projects rapid growth in lithium-ion battery demand from electric vehicles (EVs) in Chile. Total demand from battery-electric and plug-in hybrid vehicles is expected to rise from 0.5 GWh in 2024 to 13–18 GWh in 2030, and to 28–38 GWh by 2035.

This corresponds to a surge in lithium demand from vehicles — from just 44 tonnes in 2024 to 1.1–1.5 kilotonnes in 2030, and up to 3.2 kilotonnes by 2035.

Expanding national production

Chile’s lithium production capacity is projected to grow sharply, from 42 kt in 2024 to 64 kt in 2030 and 79 kt in 2035, driven by new extraction and refining projects in the Atacama and Maricunga salt flats.

Lithium export revenues could reach US$ 7.3 billion in 2030 and US$ 8.9 billion in 2035, representing 2.2% and 2.7% of Chile’s 2024 GDP, respectively.

Building the battery supply chain

Moving up the value chain — from mining and refining to cathode and battery-cell manufacturing — could generate significant economic and employment benefits.

Cathode production alone could deliver US$ 1.1 billion per year by 2030 and US$ 2.2 billion by 2035, while creating 900–1,700 jobs in 2030 and up to 3,700 jobs by 2035.

Developing a domestic LFP (lithium-iron-phosphate) battery industry to serve Latin America’s EV market could generate an annual gross product of up to US$ 6.1 billion in 2030 and US$ 12.3 billion in 2035, creating 19,000–32,600 jobs.

Establishing a battery-collection and recycling ecosystem would allow Chile to recover valuable minerals and further expand employment in the circular-economy sector.

Lower emissions, cleaner batteries

According to the ICCT–CMS analysis, batteries produced in Chile could have some of the lowest life-cycle greenhouse-gas (GHG) emissions globally.

The GHG intensity of lithium carbonate from Chilean brines is 86% lower than that from Australian ore and 67% lower than from U.S. sources.

The average emission intensity of LFP battery packs produced in Chile would be 35% lower than in China, 16% lower than in the United States, and 9% lower than in Europe.

This advantage is largely due to Chile’s renewable-energy mix, dominated by solar and wind power in the northern regions.

Environmental and social challenges

Despite its promise, the report warns that expanded lithium mining poses environmental and social risks, particularly in arid desert ecosystems. Water consumption for brine extraction is comparable to hard-rock mining elsewhere, but it represents a greater threat in the fragile salt-flat regions of northern Chile.

The study urges technological improvements to reduce freshwater use and calls for stronger community engagement and consultation processes, emphasizing that current government practices have been inconsistent.

“Adopting international best practices in due diligence and community participation could strengthen social trust and ensure that the lithium industry’s growth is both inclusive and sustainable,” the report notes.

Policy Recommendations

To fully capture the benefits of value-added lithium, the ICCT–CMS report proposes a suite of policy measures:

• Incentives for domestic battery and cathode production, including preferential lithium-quota pricing for local value-added projects.
• Stricter water-use and GHG-emission standards for lithium mining operations.
• Reform of public consultation processes to ensure early, meaningful community participation.
• Extended producer responsibility (EPR) regulations for battery collection and recycling.