Economic and environmental trade-offs in the emerging lithium supply chain

Abstract

Entering the global lithium market, characterized by strong demand and intense competition, poses significant challenges for Mexico; nevertheless, the country’s substantial lithium reserves create important opportunities for international integration and participation in global value chains. This study analyzes potential entry strategies under uncertainty, evaluating trade-offs between economic performance, risk, and environmental impacts. Results indicate that maximizing Expected Profit (EP) with confidence levels above 95% yields profits ranging between 150.61MUSD, with an average of 296.60MUSD, albeit with considerable variability. This solution produces annual greenhouse gas emissions between 909.73 and 1,008.37 kilotons of CO2 equivalent (kt CO2eq). Key international partners identified for lithium carbonate exports include the United States, Germany, and Japan, with lithium grease exports outcomes, narrowing the profit range to 153.97 MUSD-273.17 MUSD and significantly lowering variability. However, this risk mitigation comes at the expense of higher greenhouse gas emissions. To explicitly address this trade-off, a third objective function focused on emissions minimization was incorporated. Although this strategy entails higher profit variability and a lower median profit, it delivers substantial environmental gains, reducing emissions by up to 8% relative to the Worst Case (WC) strategy. Overall, the results highlight the importance of balancing profitability, risk, and environmental performance. Furthermore, a gradual and structured integration into global markets is recommended to enhance resilience.