Argentina is about to unleash a wave of lithium in a global glut
Despite significant investments in Argentina’s vast lithium reserves, only one new mine has been operational in the country for nearly ten years. However, this is about to change.
Four upcoming projects will start producing lithium soon, as shown in a government schedule seen by Bloomberg News. This will nearly double Argentina's capacity for lithium production, making it an attractive destination for battery manufacturers globally.
The developments are located on salt lakes surrounded by the Andes mountains in a region of South America known as the 'lithium triangle'. They are seen as a positive development for newly elected President Javier Milei, as they will help generate additional export revenue needed to ease currency restrictions that are holding back Argentina's unstable economy.
However, in the worldwide lithium industry, the increased production is happening when there is already a surplus of supply, leading to an abundance of inventory due to the pessimistic forecast for electric vehicle sales. Prices for lithium carbonate in China have dropped to their lowest point since August 2021.
Even though there has been a lot of exploration and growth in the lithium industry in Argentina, only three companies are currently exporting the mineral. This has still positioned the country as a significant producer, ranking behind Australia, Chile, and China. Out of the three companies, only one is relatively new - Minera Exar, which is mostly owned by Ganfeng Lithium Group Co.
Currently, Argentina is making significant progress, with four new projects getting ready to start operating at full capacity. This will increase the annual production by 79 percent, reaching a total of 202,000 metric tons, as reported by Bloomberg after analyzing government data that has not been officially released yet.
The upcoming projects include Eramet SA and Tsingshan Holding Group Co.'s Centenario Ratones, which will have an opening ceremony next week according to a spokesperson from the Mining Department. Also on the list are Posco Holdings Inc.'s Sal de Oro, Zijin Mining Group Co.'s Tres Quebradas, and Ganfeng's Mariana.
Even though the new capacity might not be fully utilized immediately, it still poses a substantial surplus in a market where worldwide production is expected to reach 1.4 million tons this year, according to Bloomberg Intelligence.
Rio Tinto Group plans to have a 3,000-ton starter plant operational by the end of the year at its Salar del Rincón project. This information was shared by Santiago Cicchetti, Rio Tinto's external affairs manager in Argentina, during a conference in Buenos Aires.
The conference on June 26-27 was buzzing with energy as it was attended by leading producers, explorers, tech companies, and regions that have significant influence on the extraction of natural resources in their area.
Up to now, the focus of the lithium industry in Argentina has been on Jujuy, Salta, and Catamarca. However, La Rioja, located just south of those provinces, is beginning to attract interest from prospectors. In an interview, Walter Gómez, the president of the provincial mining company Emse, stated that La Rioja has recently enacted a law that allows them to take back mining land from those who are not actively exploring and are only interested in land speculation.
The conference occurred while everyone was eagerly waiting for the federal approval of Milei's extensive reforms. These reforms include a plan that provides tax breaks, currency incentives, and customs advantages for industrial investments, particularly benefiting lithium developers.
Blog section by Jonathan Gilbert & James Attwood of Bloomberg.
