WTW urges firms to stress test Lithium Triangle exposure

While lithium has become a strategic input to electrification, supply remains concentrated, politicised and operationally complex, a report by Willis Tower Watson said.

From basin to balance sheet: stress testing risk in the Lithium Triangle noted organisations should identify where lithium-related exposure sits across operations, supply chains, counterparties and financing structures and test how disruption in the Lithium Triangle region would affect cash flow, contract performance, liquidity and access to capital.

"In a tighter late-2020s market, disruption could emerge through environmental stress, political intervention or logistics constraints and then propagate across markets, supply chains and balance sheets," the report said.

"Embedding scenario insight into strategic planning, risk management and insurance design can help leaders manage volatility, protect capital and strengthen resilience as lithium markets become more contested."

The report highlighted around 40% to 45% of globally identified lithium resources are concentrated in South America's Lithium Triangle, spanning Chile, Argentina and Bolivia, underscoring the region's strategic importance to future supply. However, strategic importance varies across countries.

"Chile remains the most significant current producer in the group; Argentina is increasingly important for future supply growth and Bolivia represents substantial long-term optionality but limited near-term output," the report noted.

"This means the Lithium Triangle is better understood as a strategic stress-test region than as a single point of failure. Disruption can affect current supply, future project pipelines and diversification options in different ways depending on where it occurs."

It uses three severe stress-test scenarios to show how disruption in the Lithium Triangle could unfold, propagate across systems and translate into operational, financial and insurance exposure.

Scenario one represents environmental shock, scenario two assesses fiscal and policy shock and scenario three looks at the impact of logistics and labour shock.

"The financial impact is often felt beyond direct operations: 1) delayed exports can defer revenue, 2) capital controls or payment slippage can tighten liquidity, 3) corridor disruption can trigger missed obligations, and 4) non-payment or contract frustration can create direct losses for lenders, traders, suppliers and investors with loans, receivables or structured credit exposure linked to the region," the report said.