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Monday, October 2, 2023

Argentina’s Lithium Pipeline Vows ‘White Gold’ Surge as Chile Constricts Control 

Argentina, Chile, and Bolivia together sit atop half of the world's mineral riches

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Sadaf Hasan
Sadaf Hasan
Aspiring reporter covering trending topics

ARGENTINA: A robust pipeline of lithium projects in Argentina’s mountainous north that are soon to go online appears to be unleashing a surge of production that may increase the country’s output of the essential metal for electric vehicle batteries by up to three times in the following two years. 

The 4th largest producer of the silvery-white metal in the world is located in the so-called “lithium triangle”, which, even as a surge of resource nationalism has emerged in the area, has been courting Chinese and Canadian mining businesses with a regional and market-driven business strategy.

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The main producer of lithium in the area, neighbouring Chile, revealed last week plans for a state-led public-private model, alarming investors. Bolivia has long retained strong control over its enormous, mainly undeveloped resources, whereas Mexico nationalised its lithium reserves last year. 

Despite the fact that Argentina’s state energy company YPF (YPFD.BA) began exploring lithium last year, the government has pushed to increase export revenues through mining, a rare bright spot despite economic turbulence, and the sector has been mostly driven by a private company and frequent approvals of new projects.

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“For the past ten years, Argentina has given concessions to various projects. Due to this, lithium investment, development, and growth opportunities are at this level now,” Franco Mignacco, president of Argentina’s Chamber of Mining Business, said.

Mignacco predicted that Argentina’s current 40,000 metric tonnes per year of lithium carbonate output may triple to 120,000 tonnes by 2024–2025, passing China and moving it closer to Chile, which presently produces about 180,000 metric tonnes annually.

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On top of the two initiatives that are now in production, more projects would be launched to fuel them. According to Mignacco, there are 15 lithium projects in various stages of advanced exploration or feasibility in the nation, with six now under construction.

This is in contrast to Chile, where there aren’t many new projects in the works, and the industry is dominated by long-standing players SQM (SQMA.SN) and Albemarle (ALB.N). A new project by a Chinese partnership has just received government approval in Bolivia.

Argentina’s production growth would be due to the expansion of its only two producing operations, the Salar de Olaroz mine in Jujuy and the Fénix project in Catamarca, both of which are scheduled to treble their output to 42,500 metric tonnes in the coming years.

These would be joined by the Cauchari-Olaroz project, owned by Canada’s Lithium Americas Corp. (LAC.TO) and China’s Ganfeng Lithium Co. (002460. SZ), which is scheduled to start producing lithium carbonate in the second half of 2023 and have a capacity of 40,000 metric tonnes.

Argentina, Chile, and Bolivia together sit atop half of the world’s mineral riches found beneath strange salt flats in the high Andean plains. But approaches to developing it are diverging.

Argentina’s lithium sector had “thriving through a decentralised, pro-market strategy,” stated Benjamin Gedan, director of the Latin America programme at The Wilson Centre, adding that Bolivia’s lithium sector, on the other hand, had “repeatedly stalled as a result of excessive state control.”

He said that Chile may have discovered a “savvy middle ground” with its public-private model that would grant the state majority ownership over all new lithium projects in a nationalist move while still giving the private enterprise a significant role to play.

In response to the resource nationalism trend, officials have begun to debate the idea of a regional lithium cartel; however, analysts believe this to be unrealistic given the diversity of business models and levels of development.

Meanwhile, Argentina is experiencing difficulties such as political unrest due to the country’s upcoming general elections in October, high inflation, and capital regulations that make doing business more difficult.

However, its pipeline of lithium projects might keep the industry humming and perhaps help it outpace competitors. It would be exceedingly unlikely for them to surpass their neighbour Chile, but some analysts were shooting for the stars.

Also Read: South Africa Earned USD 53 Billion From Minerals in 2021


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