Argentina well placed to become a big lithium player

The coronavirus pandemic has had far-reaching effects on most industries across the world and the lithium segment is no exception. There has been a slowdown in capital commitments, but the outlook for growth in lithium demand suggests it has merely been delayed and not derailed, and Argentina will play a key role in supplying global requirements. 

The world lithium market is expected to grow by 500% in the next 35 years, but, according to US consultancy DCDB Group, the lack of financing for new projects and expansions of existing operations will lead to lower supply between 2023 and 2025. 

Over the next three years the global lithium industry will be keen to see new projects go into production and the country with the best possibilities of achieving that is Argentina.  

Being the world’s third largest lithium producer, the Argentine government has included 15 lithium brine projects in its plan to boost mining exports over the next decade. 

Argentina currently has two lithium producers, Livent and Orocobre, operating in the Salar del Hombre Muerto and Salar de Olaroz, respectively, but the country also has the most advanced lithium brine project in the region, which is Lithium Americas' Caucharí-Olaroz (pictured) venture, which is planned to go into production in 2022. 

With US$565mn capex, Caucharí-Olaroz is one of the top 10 lithium investments in the region. The project, which is part of a joint venture with China’s Ganfeng Lithium, is expected to produce 40,000t/y of lithium carbonate, which would more than double Argentina’s current lithium output of 30,500t/y. 

In addition to Caucharí-Olaroz is the US$474mn Sal de Vida project, which is controlled by Australia’s Galaxy Resources and is currently in the design phase. 

But another factor on Argentina’s side is the support offered to investors by the authorities in Jujuy, Salta and Catamarca provinces, which are facilitating the procedures to meet the legal and environmental requirements. 

The country also has a fixed tax of 3% for lithium producers. 

In July, the country took another step to help boost the lithium industry, creating a lithium chamber called Calbafina to support new projects and aid with the definition of lithium prices on international markets. 

In a recent interview with BNamericas, Benchmark Mineral Intelligence analyst José Hofer said that the market value of the Argentine projects are at lows and this opens up opportunities for companies interested in buying projects and pushing them into production.

WHY NOT CHILE?

Chile's territory contains 60% of world lithium reserves and currently accounts for 20% of global production, but lithium can only be mined by or in partnership with a state-owned company or under a special contract, such as those granted to SQM and Albemarle.

The project closest to going into production is the US$563mn Maricunga lithium brine initiative, which is currently stalled due to red tape. 

The Maricunga project is part of a joint venture formed in 2019 by Sydney-based Lithium Power International and Chile's state-owned copper miner Codelco. 

After a 15-month process, Maricunga’s environmental impact assessment was approved last February. The engineering, procurement and construction bidding tenders are underway, but although the complex engineering due diligence began in the second quarter of this year, no further details have yet been revealed. 

Earlier this year Chilean lawmakers voted to introduce a new 3% tax on the values of minerals extracted by companies producing over 50,000t of lithium or 12,000t of fine copper. Discussion of the bill remains on hold. 

Photo credit: Lithium Americas