MEXICO CITY, May 3 (Reuters) - A new Latin American lithium association will be formed among the governments of Chile, Argentina, Bolivia and Mexico in a bid to share expertise and best practices to develop the key battery metal, the Mexican president told reporters on Tuesday.

Mexican President Andres Manuel Lopez Obrador championed a lithium nationalization law last month, the leftist leader's latest embrace of state-centric resource nationalism, even though the country's potential lithium deposits are still far from achieving commercial-scale production.

Bolivia, Argentina and Chile are often dubbed the "lithium triangle," and together account for more than half the world's reserves.

Chile and Argentina are far ahead in production, due in large part to more easily accessible salt flats rich in lithium, while Bolivia's boasts more reserves of the ultra-light white metal but lacks production.

Global demand for lithium has surged in recent years, driven in large part by miners and technology firms that hope to equip future fleets of electric vehicles, which will need large amounts of lithium as well as other metals for their rechargeable batteries.

Last year, global lithium production jumped 21%, powered by spiking demand for industry-standard lithium-ion batteries, according to data from the U.S. Geological Survey (USGS).

TOP LATAM PRODUCERS

Chile leads the way so far, helped by private operators, including two of the world’s biggest lithium producers SQM and Albemarle Corp. The South American country, also a major copper miner, produced 26,000 metric tonnes of lithium last year, followed by Argentina, which boasted output of 6,200 metric tonnes, according to the United States Geological Survey (USGS).

Argentina, where state-owned YPF shares the market with private companies like Australia's Pepinnini Minerals Ltd and U.S.-based Livent Corp, has been trying to attract more investors with new mining infrastructure and tax cuts.

Brazil is Latin America's third-biggest lithium producer with 1,500 tonnes in output last year, according to USGS, also boosted by private miners including U.S.-based Largo Clean Energy.

POTENTIAL PRODUCERS

At around 21 million metric tonnes, Bolivia holds the world's largest lithium reserves, but has been unable to develop them despite a decade of attempts. The sector is mostly controlled by state firm YLB, but a planned auction has attracted interest of major international prospectors.

Contract awards are expected by late May.

Studies suggest Mexico may have some 1.7 million tonnes of lithium mostly trapped in clay-based soils. While close to a dozen foreign companies have active mining concessions that aim to develop potential lithium deposits, Lopez Obrador has insisted that all of them will be "reviewed," which has cast a cloud over the sector's future prospects.

The Mexican populist has floated the creation of a new state-owned lithium company, modeled after national oil giant Pemex.

Peru is estimated to hold 880,000 tonnes in prospective lithium resources. Canada's Plateau Energy Metals has pledged to raise $600 million to start mining lithium in the Andean nation next year. (Reporting by Valentine Hilaire; Editing by David Alire Garcia and Marguerita Choy)