Paraguay takes next step in becoming a lithium player

Eyeing hydrogeological formations with high lithium potential in Paraguay's Chaco, Canada's Chaco Minerals is prospecting the area, aiming to take advantage of an opportunity and enlarge the so-called lithium triangle.

"We were lucky that [Bolivia's] Uyuni salt flat permeated our groundwater, so we can blur the triangle and expand it towards the Paraguayan Chaco," deputy minister of mines and energy, Mauricio Bejarano, told local media during a visit to the area.

The lithium triangle currently covers Argentina, Chile and Bolivia and is estimated to host 56% of the world's resources. Paraguay and Chaco Minerals, which leads a holding of mining companies, are eager to tap this potential.

After a successful first stage of prospecting that ended last year, a second phase of geophysical studies is underway involving advanced technologies to detect underground mineral targets, according to a recent statement by the public works and communications ministry.

Project 

Chaco Minerals, in alliance with firms such as Minera Atenea, Guaraní Lithium and Roca Lithium, is prospecting 2Mha bordering Bolivia and Argentina.

Chaco Minerals project manager Rodrigo Díaz was quoted as saying by local media that the second phase will take four or five years and require US$30mn. 

He also confirmed that a third stage, which will involve drilling and verifying the quantity of extractable lithium, is expected to require US$60-70mn.

Díaz added that the firms plan to build a pilot plant and begin extraction within six or seven years. The entire project would require at least US$700mn.

Advantages

The Chaco area has historically been underexplored for critical minerals, but the basin offers some of the highest evaporation rates in the world and is very humid, which "could help alleviate concerns related to lithium production in neighboring jurisdictions where approximately 65% of the available water supply is consumed," Chaco Minerals said in a presentation.

Additionally, Paraguay's legislation is investor-friendly and offers exemptions for the first five years of extraction, tax-free repatriation of mining profits and tax credits on exports, among others.

In addition, Paraguay boasts connectivity to ports and other markets via waterway transport. It will also benefit from a planned road corridor to connect Argentina and Brazil and an associated gas pipeline.