
Chile’s attempts to move up the lithium value chain are not working - s_Hogg
https://www.economist.com/the-americas/2019/10/03/chiles-attempts-to-move-up-the-lithium-value-chain-are-not-working
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baybal2
Cluster effect in action:

1\. If refining lithium only required local input, it would've made sense to
refine it locally, and ship to China after that.

2\. In real life, you need to import plant equipment and chemicals by tonnes
from China, that makes the final product of local refinement too expensive for
Chinese.

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pfdietz
Chile should focus on exploiting their solar resource. The best area on the
planet for solar energy is in their country (and Peru).

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jeffreyrogers
It's hard to export electricity though. Probably better for economic
development to focus on industries that can export.

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marcosdumay
So what? If you make electricity cheap, somebody will put it to good use, and
whether it's exported or not, you are improving people's lives.

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bakuninsbart
They should at least be a major international proponent of CO2 taxes and
improve their chances of becoming a valuable relocation target for energy-
intensive industries.

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s_Hogg
This is kind of interesting, because import substitution was what Latin
America tried more or less as a whole back in the 80s. It didn't work
particularly well then, which leaves the question of what to do now?

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eru
Didn't that also involve lots of tariffs?

> It didn't work particularly well then, [...]

Yes, the government (or some other institution) picking winners doesn't really
have a good track record in general.

> [...], which leaves the question of what to do now?

Basically the same as always: simplify local regulations, lower barriers to
entry both to foreign people, ideas and capital, and also to local outsider
who want to break into existing industries.

Or to make it shorter and more pragramatic: look at what Singapore did when
they were at the same stage of development.

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paol
> Didn't that also involve lots of tariffs?

That's how import substitution works.

> Yes, the government (or some other institution) picking winners doesn't
> really have a good track record in general.

Import substitution isn't about picking winners, it's about forcing local
industry to pick up the demand.

> look at what Singapore did when they were at the same stage of development.

A city-state is a completely irrelevant comparison to an entire continent.

PS I don't know if import substitution was a good strategy for south american
contries to follow. As pointed out, it didn't work very well for them. It did
work in other places at other times.

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marcosdumay
Import substitution is when the local population creates competitors for some
steps on a production chain, replacing a foreign industry piece by piece. The
process is caused by relative advantages that say that an industrializing
population must create _something_ , so a mature market is the most likely
place to go.

Tariffs have no direct relation to it, and are a large indirect hindrance,
since the entire process requires a mature importing market.

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eru
I was trying to use 'import substitution' like that as well. And that is a
useful concept.

But since eg Wikipedia
([https://en.wikipedia.org/wiki/Import_substitution_industrial...](https://en.wikipedia.org/wiki/Import_substitution_industrialization))
only uses the term in the other meaning, I'm going to concede the term.

Let's find a different term to describe the process 'local population creates
competitors for some steps on a production chain, replacing a foreign industry
piece by piece. [...]'

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panpanna
This could also be plain bad timing.

There has been some breakthroughs for using aluminum in high voltage
applications. That could have had a negative impact on investments.

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lordgrenville
It's the guano story all over again!

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scythe
South America has always had a brain-drain problem. The best universities in
SA are... not globally notable. Widespread suspicion of academia, fostered by
both conservative Christian parties and populist socialist ones, makes it
difficult for South American universities to thrive and compete
internationally. Many people draw comparisons to Southeast Asia and Korea,
major recent success stories — there, scholarly professions and institutions
are more respected, which, I think, has helped high-tech industries catch up
to the OECD more rapidly than their South American counterparts.

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neonate
[https://outline.com/HBFgk3](https://outline.com/HBFgk3)

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samstave
I thought Bolivia and Afghanistan were the leaders in lithium

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longemen3000
It's important to note the difference between the two main sources of lithium.
Chile and Bolivia has lithium in the form of brines (mainly Lithium Cloride,
high concentration, relatively easy to extract) and ores (pegmatite, hard to
extract, as requires mechanical work to grind the rock). the region of the
north of Chile, Bolivia and Argentina has the mayority of reserves of the
world, following by Afghanistan. Australia has a lot of pegmatite.

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samstave
Thank you, and seriously; how the heck do you this?

(I just want to know how someone learns this information to begin with)

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longemen3000
i'm a chemical engineer from chile, so at least i have to know something about
local minery, right?

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samstave
What do you engineer, I want to know more abt you

