As the race for green energy intensifies, lithium has emerged as a battleground not just for market dominance, but for sovereignty. In the Global South, countries endowed with this “white gold” face an old dilemma in new form: how to assert control over their natural resources in a world where clean energy is reshaping global power structures.

“Just so it’s clear: Lithium doesn’t belong to the government or the state. Lithium belongs to the people and the nation of Mexico.” Mexico’s President Andres Manuel Lopez Obrador stated this comment as a response to foreign firms' lithium mining operations in his country. Furthermore, Obrador doubled down his statement by saying that lithium is going to be exploited for the benefit of Mexicans, for Mexicans, and by Mexicans. Following the rapid growth of demand for green energy technologies, nationalist rhetoric such as these has emerged as a response from state actors in the Latin American region. Latin America is especially significant because over 50 percent of the world's identified lithium reserves are in this region, which is Chile, Argentina, and Bolivia. We propose that the original definition of ‘resource nationalism’ could be shifted to accommodate this increasing demand for critical minerals in the global energy transition.

After the 2015 Paris Agreement, which outlined global climate commitments, was signed, the 17 Sustainable Development Goals (SDGs) were established as a framework to achieve it. The United Nations General Assembly adopted the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs), a set of 17 goals and 169 associated targets that are to be fully implemented by 2030. With the 2030 Agenda deadline approaching, carbon emissions from traditional energy systems have contributed significantly to the increase in atmospheric greenhouse gas (GHG) concentrations. A successful global transition to a renewable energy system is the central key to tackling climate change and meeting future energy needs. This is especially important to achieve global-mean temperature targets below 2 °C and pursuing efforts to limit it below 1.5 °C above pre-industrial levels and requires an unprecedented roll-up of renewable infrastructure, such as solar panels to wind turbines, battery storage, electric vehicles and electricity cables, green technologies.

However, energy systems powered by low-carbon technologies differ profoundly from current systems of fossil fuel trade and infrastructure. The manufacturing of renewable infrastructure generally requires considerable volumes of critical minerals, with mineral intensity varying greatly across different technologies. Among these critical materials, lithium has garnered the most interest as a key component for batteries, dubbed “oil of the future.”

Today, Lithium-ion batteries primarily composed of raw lithium are among the most critical industrial items necessary to achieve the transition to lower carbon emissions worldwide. Essential to EVs and the effective delivery of solar and wind power throughout the electric grid, these batteries also charge a majority of consumer electronics products by providing the highest efficiency compared to other types of battery. While the supply chain for this battery is varied throughout the globe, the mining and processing of lithium is concentrated in just a few regions.

The critical raw materials essential for driving the global green transition are now at the forefront of geopolitical concerns. Major states around the world are emphasizing domestic production of green technologies through industrial policies, leading to increased subsidies and trade fragmentation due to geopolitical rivalry, notably between the United States and China. Meanwhile, many countries in the Global South that possess critical raw materials are taking measures toward ‘green resource nationalism’ to capitalize on this opportunity, by implementing policies like export restrictions.

Theoretical Foundations

The traditional concept of ‘resource nationalism’ refers to various forms of state involvement in the extraction, processing, and sale of natural resources. It is also generally used to describe the state’s involvement with international companies operating within their national jurisdiction. Resource nationalism is linked heavily with the historic shift from production being dominated by Western powers and their companies, to its control by developing countries – and their representative body, the Organisation of the Petroleum Exporting Countries (OPEC). The study of resource nationalism was triggered by the OPEC export embargo in 1973–1974. Notably, the first direct use in English was in 1973 by the Japanese development economist Yoichi Itagaki. 

The themes used to describe resource nationalism are generally similar, which is its effect on export supplies and prices, or the benefits gained by the country from this strategy. Since the 1980s, studies about this phenomenon have been losing popularity, but it returned in the 2000s as natural resource prices rose, making the potential of yields to be made from rents exponentially grow in resource-rich countries. Economic rent is the principal motivation of resource nationalism for state actors.

Haslam and Heidrich described resource nationalism in their book, “The Political Economy of Natural Resources and Development” as a post-neoliberalism response in Latin America. They recognize this concept is used pejoratively to signify, interchangeably, nationalisations in the 1970s and government interference in the affairs of foreign firms in the 2000s. They identify a liberalisation period in the late 1980s to the late 1990s and a re-nationalising phase after the mid-2000s, in which some resource-rich countries reasserted their role and presence in the sector. In the late 2010s, the study of resource nationalism was remarked by some scholars as dead, especially in relation to oil-rich Latin American states. This claim was backed by the collapse in oil prices since 2014 that made this strategy lose relevance.

Wilson further explains that political institutions pose incentives and constraints for governments, which in turn condition their policy objectives for resource industries regarding the introduction of resource nationalism policies. Rentier states prioritize direct state control of firms, while developing countries favor industrial policy to drive economic growth. Meanwhile, developed economies prefer market-based policies to attract resource investment, limiting their nationalistic interventions to taxation. Thus, political institutions are essential to explain the heterogeneity of resource nationalism, as they shape the objectives of governments and their resulting policies. Resource nationalism is not a primarily instrumental response to changing global economic landscape, but is also being molded by the political institutions of resource-rich countries.

Moving to explain the arrival of GRN as an evolution of traditional resource nationalism, we can define three main characteristics of GRN as government strategies which are (1) localisation measures, which CRM-rich governments tend to rely on in the absence of fiscal capacity to provide competitive subsidies; (2) export restrictions, bans on raw exports of minerals, often driven by aspirations for domestic economic development through resource based industrialisation; and (3) stringent tax policy, introduced to achieve various objectives such as generating state revenues, addressing short term supply-demand mismatch, or promoting value addition.

Prospects and risks

From a positive perspective, GRN policies present an opportunity for resource-rich countries to recover a greater share of profits in the midst of the global energy transition, ultimately through more localized processing of lithium. Such vertical value chains would accelerate the creation of a green economy in the lithium-rich countries than the mere extraction of its resources would. The expectations of state actors in adopting GRN are as follows. First, establishing export restrictions to divert minerals away from raw exports to the domestic market. Second, process and add value to these minerals domestically.  Finally, the economic activity created by the processing will spill over to other sectors and stimulate growth.

This logic stems from the limited tools available to countries in the developing world. Policy interventions in the U.S., EU and China are centered on subsidies that are unaffordable. Other factors fueling the support of GRN are the tactics of foreign mining firms like transfer mispricing and underpricing which leads to economic resentments from local actors.

From a negative perspective, GRN policies are generally blamed for the high prices of critical minerals needed for the energy transition, consequently making the fight against climate change more expensive. Other common conceptions on GRN are that these policy packages are often riddled by legal and administrative deficiencies and ineffective enforcement. It is also often thought of as a political vehicle for populist leaders' messaging and the resulting economic activity captured for patronage.

Moving on, we will describe negative domestic implications of GRN policies, such as the complexities of the lithium mining sector; state capacity needed to deal with externalities; Chinese dependence; implementation gaps; and overinvestments. We wrapped this section by discussing some global repercussions of GRN adoption.

Implementation Challenges and Domestic Trade-Offs

In Bolivia, radical GRN strategies implemented since the late 2000s backfired because of the deterioration of the state’s financial capacity before the mining projects generated a steady flux of income. Delays and the lack of efficient manufacturing technology impede these efforts, prompting a shift of attitude towards foreign capital to realise the potential benefits of Bolivia’s lithium deposits. Obaya contended that the intricate demands placed on the state's technological and financial resources are the primary reasons for this.

Looking at other implications, analyses from Warburton provide several lessons learned from the GRN policies in nickel resources from Indonesia. First, dealing with externalities. The nickel smelting industry has created a devastating impact upon waterways and forests. It also depends on coal-fired power plants and driving up carbon emissions. While these smelters have created tens of thousands of jobs, stories continue to emerge of dangerous working conditions, and high wages are undermined by inflated living costs inside the industrial parks. There needs to be an upgrade on the state’s capacity to properly respond to these externalities, Second, the dependence on Chinese firms and banks. China’s domination of financial and institutional resources on green energy technologies usually forced these resource-rich countries to invite Chinese influence. If the state forces these Chinese companies to open processing plants staffed by foreign nationals, the value for the local economy will also be diminished.

Lessons from the oil sector also provide insights on challenges facing GRN policies. Many Sub-Saharan countries have reformed their extractive industry legal frameworks to improve the governance of their natural resources. However, they are failing to reap the full benefits of these policies due to the lack of implementation of the new rules, called the “implementation gap.” This concept is defined as the difference between a country’s legal framework for good governance and anticorruption, and the actual implementation or enforcement of that same legal framework. We argue that the implementation gap will threaten the GRN policies effectiveness, especially since lithium mining is an extensive and expensive sector as shown in the Bolivian case.

Other lessons from the oil industry also include the potential of overinvestments. This is described as investing an astronomical amount of investment on a new processing project during a period of low prices. Over investment has long plagued the oil industry, since states always need the prestige of refining their own products. In the global energy transition, some critical minerals such as nickel are constantly threatened by technological advancements, rendering it obsolete.

Global Implications and Strategic Caution

GRN adoption also had some repercussions on the global scale. With the production of critical minerals becoming more concentrated amongst a few countries, export restrictions on critical raw materials have seen a five-fold increase since 2009. Data also shows that 10% of global exports in critical raw materials are now facing at least one export restriction measure. Export taxes were the most common type of export restrictions used in 2020. This relates to the fact that WTO prohibits quantitative restrictions on exports while export taxes are not.

While both imports and exports of critical minerals become highly concentrated, trade of these materials remains relatively well diversified. This suggests that the possibility of significant disruption to the global energy transition by disturbances to import or export flows of critical raw materials is limited.

With GRN emerging as an attractive option to drive industrialisation for lithium-rich countries, historical precedents cast doubts about the likelihood of successful resource-led development. The rents from the mining sector have traditionally been difficult to translate into other sectors as an engine for economic growth and development. For Indonesia and other Global South countries attempting “downstreaming” policies, these developments signify that they need to be cautious of the impending consequences for their economy. This is largely due to China’s dominance in manufacturing renewable energy infrastructure, leaving these countries to be dependent on China’s terms.

Green resource nationalism offers the Global South a chance to reclaim control in the energy transition, but sovereignty alone is not enough. Without state capacity, environmental safeguards, and independent industrial strategies, the risk is simply exchanging one form of dependency for another.