Strategic Implications of Resource Nationalism on Lithium Equity Valuation

The global lithium market, a linchpin of the clean energy transition, has become a battleground for resource nationalism. As governments in key producing regions assert control over critical mineral assets, investors face a dual challenge: navigating geopolitical risks while capitalizing on opportunities in a fragmented supply chain. This analysis examines how divergent nationalization strategies in the Lithium Triangle-comprising Argentina, Bolivia, and Chile-alongside emerging policies in Mexico, are reshaping equity valuations and investor sentiment.

The Lithium Triangle: A Spectrum of Nationalization

Bolivia, Chile, and Argentina hold nearly 56% of the world's lithium reserves but have adopted starkly different governance models. Bolivia has pursued full nationalization through its state-owned Yacimientos de Litio Bolivianos (YLB), restricting private firms to technical services and mandating domestic processing. Despite a $1.4 billion partnership with China's CATL in 2023, Bolivia's lack of refining capacity has limited its global market share to just 0.04% of processed lithium, according to an IR Review analysis.

Chile, by contrast, has embraced a hybrid approach. Its National Lithium Strategy (NLS), launched in 2023, established the National Lithium Company (NLC) to hold majority stakes in joint ventures while allowing foreign participation. This shift has alienated major investors like Tianqi Lithium, which saw its stake in Sociedad Química y Minera de Chile (SQM) sidelined, according to an IR Review analysis. Stock prices for SQM and Tianqi have since declined, reflecting investor unease over reduced access to Chilean assets.

Argentina has taken a market-oriented path, decentralizing lithium governance to provincial authorities. This has attracted Chinese firms like Zijin and Ganfeng, which secured 40% of Argentina's lithium exports by 2023 through $2.7 billion in investments, according to an IR Review analysis. However, the absence of cohesive national policies has left the country vulnerable to revenue leakage and limited value-added development.

Equity Valuation Volatility and Investor Sentiment

Resource nationalism has introduced significant volatility into lithium equities. In Q3 2025, lithium carbonate prices surged to an 11-month high of $12,067 per metric ton in August, partly driven by supply-side disruptions like CATL's temporary mine closure in Jiangxi, China, according to a Nasdaq report. This event triggered a 19% rise in Tianqi Lithium's stock and a 25% jump in Liontown Resources, underscoring market sensitivity to geopolitical and operational shocks.

However, long-term oversupply risks persist. Aggressive capacity expansion has driven lithium prices down 90% from their 2022 peak, with analysts projecting a supply glut until 2030, according to a Nasdaq report. For investors, the key question is whether nationalization policies will stabilize supply chains or exacerbate volatility.

Geopolitical Tensions and Legal Risks

Investor-state disputes have surged, with 32 cases filed in 2025 alone, according to a RFF report. Mexico's nationalization of lithium under LitioMx and Colombia's designation of mining areas as natural reserves have sparked tensions with foreign firms. Chinese companies, in particular, face heightened risks: Ganfeng's appeal of its revoked Mexican concession and exclusion from Chilean negotiations highlight the fragility of cross-border partnerships, according to the RFF report.

Conversely, U.S. and Canadian firms are leveraging the Inflation Reduction Act (IRA) to secure non-Chinese supply chains. POSCO's $1.2 billion investment in Australia's Mineral Resources, for instance, reflects a strategic pivot to IRA-eligible projects, with POSCO paying a 44% premium over market consensus, according to a Discovery Alert report. Such moves signal a shift toward diversified, geopolitically resilient portfolios.

Strategic Opportunities Amid Uncertainty

Despite risks, resource nationalism creates opportunities for agile investors. Companies with stakes in politically stable regions-such as Australia or North America-stand to benefit from policies like the IRA, which incentivize domestic processing. Additionally, firms offering advanced technologies like direct lithium extraction (DLE) are gaining favor in state-driven initiatives, as seen in Bolivia's partnership with CATL, according to an IR Review analysis.

For long-term investors, the key is to balance exposure across jurisdictions. While Chile and Bolivia's state-centric models pose regulatory risks, Argentina's liberalized market and Mexico's industrialization plans offer growth potential. Diversification into battery recycling and downstream manufacturing-sectors less vulnerable to raw material nationalism-could further mitigate supply chain shocks.

Conclusion

Resource nationalism is redefining the lithium landscape, with equity valuations increasingly tied to geopolitical dynamics. Investors must weigh the risks of state intervention against opportunities in technology-driven projects and diversified supply chains. As the race for critical minerals intensifies, those who adapt to the new reality of state control will be best positioned to navigate the volatility ahead.