In an effort to collectively boost their bargaining power, Argentina, Chile, and Bolivia, and Brazil are exploring the idea of forming an OPEC-like cartel for the lithium industry. The four states hold nearly 65% of the world’s lithium reserves, and the proposed group would mirror OPEC’s functions of coordinating production and pricing, while standardizing practices in a nascent and strategic market for the region.

However, bringing the idea to fruition is likely to spark opposition from the industry, as well as internal political opposition from environmentalists and indigenous groups that contributed to left-wing victories in Chile, Argentina, and Brazil. Furthermore, additional obstacles include China’s monopolist position in the industry and the long-term political viability of such an idea.

Outside of its discussion on the continent, the idea of a cartel for transition metals has found support elsewhere. Last November, Indonesia announced its interest in forming an OPEC-like organization for nickel producers but has struggled to find willing partners in the region. In contrast, the momentum behind establishing an OPEC-like organization for critical minerals follows similar regional initiatives led primarily by Brazil.

Despite lacking the same quantities of lithium as its neighbors, Brazil’s inclusion in the cartel points to its long-term ambitions in the mining industry to capture a greater share of the value chain for the region’s natural resource wealth. By leveraging its large consumer market and its experience in automotive manufacturing with alternative fuels, Brazil is well-positioned to capture market share in downstream mining activities.

In addition to its interest in the lithium cartel, Brazil’s government has revived discussions around a common currency with neighboring Argentina to be used in bilateral trade. In doing so, both countries aim to reduce vulnerabilities to their domestic currency, which have been hobbled by the strength of the US dollar and continued tightening by the US Federal Reserve. As an additional motive, revenues from commodities played a crucial role in Brazilian President Lula da Silva’s previous terms in office, enabling his government to fund popular social welfare programs like Bolsa Familia during a commodities supercycle in the early 2000s.