Unlocking the lithium ledger: a new era of fiscal competitiveness

The global lithium market is at a pivotal moment. While a market surplus exists today, demand is projected to outpace supply by 2034. This underscores the critical need for continued investment in new projects to meet the surging demand driven by the energy transition and the explosive growth of electric vehicle production.

Introducing our latest insight

In our latest insight, "The lithium ledger: fiscal competitiveness in the global race for resurces," delves into the intricate factors that will determine the winners and losers in this race. We assert that beyond resource quality and cost efficiency, a country's fiscal framework—it's tax, royalty, and policy environment—is a decisive factor in attracting and securing the necessary capital for project development. We explore the characteristics of a well-designed fiscal regime and benchmark the competitiveness of frameworks across key lithium-producing jurisdictions.

Our proprietary analysis tool

Through our proprietary Fiscal Regime Analysis Tool™ , developed by Wood Mackenzie's consulting team, we deliver a detailed, data-driven comparison of key lithium-producing jurisdictions. This tool integrates direct and indirect taxes, as well as royalties, into company cash flows to produce insightful fiscal metrics - including government and investor share, internal rate of return (IRR), and net present value (NPV), among others. Leveraging Wood Mackenzie;s extensive asset coverage and deep industry expertise, this integrated fiscal capability enables a comprehensive evaluation of fiscal terms and competitiveness across jurisdictions. Our analysis reveals that a stable, transparent and predictable fiscal regime is not just a benefit but an essential requirement for long-term investment confidence and returns.

Our commitment to data-driven insights

This insight reflects the work of Wood Mackenzie's consulting and research teams, demonstrating our continued commitment to delivering data-driven, context-rich perspectives that help investors and policymakers assess and benchmark fiscal competitiveness globally.

What this must-read report reveals:

• A shift in market leadership: The lithium market, once dominated by Chile, has seen rapid competition, with Australia and China emerging as current leaders. We project a significant shift in the global production landscape, with Argentina expected to surpass Chile and become the third-largest producer by the end of the decade.
• The impact of fiscal policy on competitiveness: Our research highlights how different fiscal regimes create varying level of risks for investors. For example, Chile's contrast, with the implementation of its new RIGI framework, Argentina is expected to emerge as one of the most fiscally competitive jurisdictions in the global market. Our analysis shows that even with Argentina's 4.5% lithium export levy, Chile's new CEOL rates result in a higher government share.
• The importance of a balanced regime: A sustainable fiscal regime must algin investors requirements with government objectives to ensure long-term value creation and durable partnerships. Misalignment can discourage capital deployment, slwogin development and eroding competitiveness.
• More than just fiscal policy: Whilst fiscal competitiveness is critical, long-term project success depens on multiple variables, including resource quality, permitting timelines, political stability, and infrastructure. Jurisdictions that deliver across both fiscal and non-fiscal dimensions will ultimately attract the most investment.

Learn more

For a full understanding of the complex dynamics at play and to get ahead in the global race for lithium resources, connect with our experts and secure your access to this essential insight.

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