lithium mining

 

Argentina is thought to be on track to match — and potentially even surpass — neighboring Chile as Latin America’s leading lithium producer by 2030.

Lithium, sometimes referred to as “white gold” due to its light color and high market value, is regarded as a critical component of the energy transition.

Momentum behind Argentina’s lithium mining boom is picking up fast.

The country is thought to be on track to match — and potentially even surpass — neighboring Chile as Latin America’s leading lithium producer by 2030, with investors and operators from across the globe scrambling to get involved in its burgeoning ventures.

Lithium, sometimes referred to as “white gold” due to its light color and high market value, is regarded as a critical component of the energy transition. The lightest metal in the world, lithium is commonly used in electric vehicles, cellphones and rechargeable batteries for laptops.

Analysts at political risk consultancy Eurasia Group say the trajectory of Argentina’s lithium production hinges on the upcoming presidential election and how the outcome affects the country’s macroeconomic outlook, as well as the likelihood of interventionist policies.

“The stakes are high,” analysts at Eurasia Group said in a research note published Sept. 18. “At risk is not only Argentina’s opportunity to develop a robust lithium — and possibly battery — supply chain, but also the progress of the global energy transition.”

“If Argentina’s lithium boom is stifled, it will hinder supplies needed to feed the electric vehicle (EV) revolution, especially later this decade when supply-and-demand fundamentals for lithium are expected to tighten,” they added.

Latin America currently supplies about 35% of the world’s lithium, according to the International Energy Agency, with Chile (26%) and Argentina (6%) leading the way. The region is estimated to hold more than half of global lithium reserves, mainly located in Argentina (21%) and Chile (11%).

An Indigenous protester holds a flag of Argentina during a demonstration against the constitutional reform promoted by Governor of Jujuy Gerardo Morales outside the Justice Palace on August 2, 2023, in Buenos Aires, Argentina.An Indigenous protester holds a flag of Argentina during a demonstration against the constitutional reform promoted by 

At present, Argentina has two lithium extraction projects, one in the northern province of Catamarca and another in neighboring Salta. Both operations are predicted to double production in 2024 and an additional 10 projects are currently under construction.

The growing momentum behind the country’s mining boom means that analysts at Eurasia Group expect Argentina’s lithium production to grow fivefold next year and approximately tenfold by 2027.

We’re seeing investors and operators from all walks of life coming into the country; Russian, Canadian, Chinese, American, you name it, that’s happening — which is very interesting.

Eurasia Group said one “underlying force” that may ultimately hamper Argentina’s emerging lithium industry would be a plunge in global demand and prices below analyst expectations. They note, however, that this prospect appeared increasingly unlikely. “Argentina’s opportunity is now its own to embrace or lose,” they added.

Prices of lithium carbonate in China traded at roughly 166,500 yuan ($23,124) ahead of the country’s annual “Golden Week” holiday, reflecting a fall of nearly 70% when compared to the same period last year.

Looking ahead, however, demand for lithium is expected to be supercharged by the rising deployment of clean energy technologies and some analysts believe prices could spike to record highs as the world begins to face a shortage.

Argentina has infinite untapped resources when it comes to mining. We’re talking about a new Chile if not more — with the key ingredient being time,” Mariano Machado, principal analyst for the Americas at Verisk Maplecroft, a global risk intelligence firm, 

When it comes to lithium [in Argentina], you cannot skip but you can fast forward that process, so it really reduces that exposure,” he added. “We’re seeing investors and operators from all walks of life coming into the country; Russian, Canadian, Chinese, American, you name it, that’s happening — which is very interesting.”

Argentina vs. Chile

Chile is the world’s second-largest lithium producer after Australia, and a refiner of the essential battery metal.

Leftist President Gabriel Boric announced in April that the state was taking a majority stake in the country’s lithium industry, dismaying some business leaders.

The move was interpreted as a quasi-nationalization of Chile’s industry, with private companies now needing to partner with the government in order to exploit the country’s lithium resources.