Iran back in geoeconomics game

Suddenly, Iran got a big boost in her geoeconomics power spectrum.  Lithium was discovered in abundance in the Hamadan province of North-Western Iran. Understandably, Iranian lithium deposits is the second largest globally giving the beleaguered nation a heaven sent boon.  My analysis:

Lithium a silvery white alkali soft metal used extensively in many of the everyday products. As a critical component in the cathodes of lithium-ion used mainly in batteries of various kinds, such as electric vehicles power packs & re-changeable batteries, lithium is a sought after commodity. Either excess or surplus of lithium could affect the supply lines of many products that use lithium based batteries as power source.

Generally speaking lithium is extracted from two sources. Brine mines is the primary one. Chile which boasts the largest deposits of more than 9.2 million tonnes is the second largest producer of about 39,000 tonnes of lithium. Australia, on the other hand, extracts lithium from rock source, yet stands as number one producer with 61,000 tonnes. China has a mix of both but tends to get more from the salt mines. Annually 19,000 tonnes are coming out of her brine and rock sources.

Geoeconomics could play the role of spoiler. China being the largest user of lithium gobbles up about 40 percent of the 93,000 metric tons of raw lithium mined globally. South Korea and Japan also imports large quantities of lithium after China.

Obviously, Iranian lithium lies in rocky areas. Even though the estimation of her deposits is on the ball-park figure of 8.5 million tonnes neither she has the capacity to extract nor the ability to export major part of her production due to prevailing sanctions targeted against her. Collaborating with Australia is out of question. Hence, only China can help Iran to work over the deposits.

Now look at the Iran – China 25 year cooperation programme that was signed in 2021. According to this covenant China has agreed to inject $300-$400 billion by foreign direct investment into the Iranian oil, gas and petrochemical industries. The bottom line is China originally baulked at this high figure as Iran might not offer eligible projects for the fruition of this agreement.

Lithium bonanza solves the conundrum. China smitten by Australian negativity towards her during the last few years would have sigh of relief. Iran is not only a reliable partner to work with as regards to trade and economic progress, but could help in implementing China business strategy in Middle-East and elsewhere.

Sooner than later both would ink a deal to extract, process and export lithium from Iran meant for China and the Far East. That sounds a workable proposition for these two countries to enhance their geoeconomics prowess.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist