The global push for renewable energy to reduce climate-aggravating emissions has revealed how the environmental and social costs of mineral extraction fall disproportionately on local communities and ecosystems.

The rush for so-called “critical” minerals exacerbates the very crises it seeks to help solve, worsening ecological degradation and perpetuating socio-economic injustice in the Global South.

The circular economy allows the development of new economic and governance models to overcome the linearity of the international trade system. From a Latin American perspective, the circular economy must incorporate ecological parameters to ensure the maintenance of ecosystem services and the value of raw materials, while respecting the human rights of those who depend on the ecosystems from which these raw materials are extracted.

AIDA is a pioneering regional organization that uses the law and science to protect the right to a healthy environment in Latin America. Focused on strengthening the just energy transition, AIDA's work includes an emphasis on value chains and circular economy models from a Latin American perspective.

The race for lithium from the perspective of place

Andean wetlands are a series of highly biodiverse ecosystems that provide multiple ecosystem services. However, these ecosystems are highly fragile and are currently threatened by the climate crisis, water crisis, and mining pressures, particularly regarding lithium.

The Gran Atacama, located in the high Andean wetlands of Chile, Bolivia and Argentina, is estimated to contain approximately 68 percent of global lithium reserves, in the form of brine. As such, the mining industry has renamed this region to focus on one mineral, calling it the “lithium triangle.” The reality is that the area is much more complex than just its minerals.  

In the Gran Atacama, local communities and indigenous peoples depend on the stability of the ecosystem for their cultural, social and economic well-being. Economic activities there are linked to agriculture, industrial employment, bureaucratic services, and tourism.

Sixty percent of lithium deposits are in areas of medium, high and extremely high-water risk. At least 30 ongoing lithium mining projects in various stages of development have been identified throughout the Gran Atacama.

Public opinion in these three countries has demonstrated significant concerns about the lithium mining industry and the sustainability of these activities, particularly in relation to a history of mismanagement of environmental liabilities in the past.

A circular economy perspective is essential for sustainability

The current climate crisis is linked to the linear nature of our current economic system and its assumption of infinite natural resources. The history of large-scale mining activities in the Global South exemplifies this perspective.

The circular economy could offer a solution to create a more sustainable value chain for raw minerals and enable a just energy transition that benefits all regions of the world. However, the following points must be considered:

• The drivers and barriers for creating a circular economy within mining processes may vary from region to region. Building a global circular economy for lithium needs to encompass the material extraction stage more comprehensively, not only through industrial circularity activities, but also from an ecosystem and human rights perspective.
• The loss of natural capital in lithium-exporting countries is a major concern, not only because of material extraction, but also because of its impact on ecosystems. In Latin America, non-renewable natural capital represents 3.2 percent of total wealth, while natural capital represents 10.9 percent. Intensive extraction without recognizing environmental and human rights concerns depletes natural wealth, some of which is already used by local populations.
• A circular economy for raw materials must balance the extraction of minerals with the preservation of ecosystems. Economic mechanisms must be found to prevent the replacement of natural capital with technological capital, to create a truly circular economy.
• Tariff inequality for critical minerals, including lithium, is widespread and results in an uneven distribution of economic benefits along the value chain of raw minerals. Market rules impose low tariffs on critical raw materials, while high tariffs are applied to technology and specialized labor, neglecting the added value of natural resources. This results in lost potential to generate further profits in subsequent stages of the value chain.
• Economic mechanisms are needed to support ecosystem conservation, proper management and economic valuation of nature, and to address the inherent inequality and linearity of the current economic system.