For the past nine months, a U.S. company that is the world’s largest producer of lithium—a key ingredient in electric-car batteries—has been locked in battle with the Chilean government over pricing issues, production quotas, and environmental compliance. With no resolution in sight, the fight is sending tremors all the way up the electric vehicle supply chain that provides batteries to Tesla Inc., Nissan Motor Co., Bayerische Motoren Werke AG, and other car makers.
The drama is playing out in the northern reaches of Chile’s Andes Mountains amid the arid and austere Atacama Desert, a vast, high-altitude bowl surrounded by snow-capped volcanic peaks named after ancient gods of the indigenous people. The U.S. company, Albemarle Corp., has taken over a massive salt-flats mine, pumping scarce briny water through dried-out salt marshes and lagoons to extract the prized mineral. A dozen or so miles away, thick flocks of Andean flamingos feed peacefully in a lagoon teaming with tiny shrimp, as they have for countless millennia. But as mining activity surges, water tables are falling amid growing environmental concerns.