Last week, news shook the auto industry. For the first time, a Tesla electric car, the Model Y, leads the global sales chart. In the first quarter of the year it relegated the Corolla, one of Toyota’s flagship models. Between January and March, Tesla shipped 267,200 units of its Model Y versus 256,400 Corollas, which rely on fossil fuels, according to consulting firm Jato Dynamics.
It is only the first indication of the phenomenal conversion of means of transport. The advancement of hybrid and electric cars has a full impact on the demand for two critical inputs, lithium and copper, of which Argentina has plenty. Today the country is the 4th world exporter of lithium, which is used in batteries, and “has enormous geological potential position itself among the top copper producers”, says a report by the CAEM, which brings together mining companies.
The overall increase in demand is partly reflected in the statistics. In 2022, Argentine mining exports totaled $3,857 million. Of the total, lithium accounted for $600 million. Most were gold and silver sales. Abeceb expects a slightly higher figure for this year (2%), but with lithium rises to 1,000 million dollars“Partly because of the increase in international prices and partly because a new project is starting up,” summarizes Natacha Izquierdo, an economist at that consulting firm.
Copper deserves special consideration. It is a key mineral for both automotive electrification and the transition to clean energy use. For these two reasons, the demand for copper will triple in the next two decades, according to data from International Energy Agency. It is estimated that there are more than 10 million electric vehicles in use (many of them are Tesla) and estimate they could reach 66 million by 2025.
These figures show the growth potential of Argentina’s mining sector. Lithium, explains the economist Marcelo Elizondo, is not a classic commodity. “Even primary production requires chemical inputs, transport and logistics, financing and related professional services. It is a sector that spills over the entire supply chain“, he says. However, he points out that “the long-awaited local production of batteries is only possible when there is more scale”, that is, when the electric car fleet in Argentina grows.
Sounds a bit distant.According to data from ACARA (the chamber of drug dealers), in 2022, only 7,842 “unconventional” units were patented.: 7,588 hybrids and 260 pure electrics. However, the figure represents an increase of 33% compared to 2021 and of 232% compared to 2020. «Last year not only did the business grow in units, but also Furthermore, 14 models have been added to the offer”, states the report. Toyota and Ford accounted for almost 92% of electrified mileage sales.
Export potential Lithium production is progressing more markedly than copper. Mining companies estimate that Argentina In 2030, 12 billion dollars could be exported whether regulatory frameworks are adapted to encourage activity. At the moment, Izquierdo recalls, “there are investments delayed by import inventories and the impossibility of transferring foreign currency from overseas earnings.”
Automotive electrification and the advancement of renewable energies present a huge opportunity. The world’s leading copper producer is Chile. In 2022, it exported a total of $50,000 million,”a figure equivalent to that of the Argentine agro-industrial sector”, says the CAEM. Copper brings Peru $19.5 billion a year. Argentina stopped producing copper in 2018, with the closure of the La Alumbrera mine, in San Juan.
But there are about 20 projects in dance. Among these stand out Josemaría (head of the mining company Lundin Mining) and El Pachón (Glencore), Taca Taca (First Quantum), Los Azules (McEwen), Filo del Sol (Filo Mining), Altar (Aldebaran), Valle de Chita (Minsud ) and San Jorge (Solway). “Should the more advanced ones materialize, local copper production could account for almost 25% of Chilean production”, warns the CAEM.
The same goes for lithium. Two fields are active in the country (Mina Fénix and Salar Olaroz) and both have expansion plans underway. Currently, the largest producer of this key battery input is Australia (54.3% of the total). The Salar Atacama follows from Chile (24%), China (14%) and Argentina, with 6.2%. The difference is that its exploitation requires “an average investment of 1,000 million dollars, three times less than that of coppersays Left.
Lithium is used in car battery cathodes. Copper, a metal prized for its ability to conduct electricity, has a much higher incidence. In a combustion car, it is mostly used in wiring and each unit carries an average of 23 kilos. In a hybrid vehicle, this goes to 39.3 kilos; for a “plug-in” hybrid vehicle at 60.3 kilos; and in a pure electric it reaches 83.2.
The rise of electromobility is produced by the effect of incentives from some governments (“In the United States, direct loans of up to $7,500 are granted for the purchase of new electric vehicles and $4,000 for used ones”, says the Argentine ambassador in Washington, Jorge Argüello), and for greater awareness of environmental protection.
This is despite the fact that an electric car is more expensive than a traditional combustion car. Without going any further, Tesla’s Model Y, the best-selling car in the world, costs twice as much as Toyota’s Corolla. While Tesla Model Y prices in the US start at $47,490, while Corolla and RAV4 (in 2nd and 3rd place) retail for $21,550 and $27,575 respectively.
Lights and shadows in cars
Mining companies say the sector has a big opportunity to generate foreign exchange. Village “it has enormous potential” to produce lithium and copper, two of the critical minerals for the assembly of electric-powered vehicles. Marcelo Elizondo, international trade specialist and DNI consultancy director, points out that “the entire automotive industry in the world is redefining itself and that means redefining what multinational corporations do in each country”.
In this sense, Argentina (it is one of the 30 countries where cars are produced) “can be eligible within the multinationals if you develop an ecosystem to produce electric vehicles”, underlines Elizondo.
In any case, the expert clarifies that for this “new suppliers will be needed; trained human resources, investments in research and development and incorporation of new technologies”. As with any conversion process, Elizondo points out that not everyone will receive good news.
He says this is most likely the case “There are current auto parts manufacturers that will be affected. Those who produce inputs for mechanical and petrol-engined cars will have to reconvert”, even if not immediately.
Source: Clarin
