In just six years Argentina will be able to satisfy 17% of the world’s lithium demand and thus strengthen the foreign exchange income in the country. But this auspicious phenomenon can stop if it is not quadruples the electricity supply to the provinces of the Northwest and there is none a significant investment in the improvement and maintenance of the road and railway network, according to work by the World Bank.
The report was prepared for the Chamber of Mining Companies (CAEM), whose members know the infrastructure deficit that can put million-dollar initiatives at risk: expensive logistics, with few unpaved roads. They also know that the time to make them happen is now.
Argentina must take advantage of this the current window of opportunity which was generated because the world requires lithium – even copper – to make electric car batteries and other products to store or transmit energy from renewable sources. This needs to happen before new technologies or major competitors emerge.
“There are projects in Brazil and Africa that will be great competition. That’s why Argentina It must produce as soon as possible and consolidate itself on the market faster than other players,” he said. Clarion Ignacio Celorrio, executive vice president of Lithium Argentina.
To some extent, with lithium, a scenario similar to that of Vaca Muerta was taking shape. On this site There are many resources but there are no pipes to release the gas and oil. before green energy replaces hydrocarbons and other suppliers take control of potential markets. According to the projections of the National Secretariat of Mines, the entire mining sector it could export more than $24 billion in 2030, half of which would be lithium. The condition is that, to the three projects in production, another six are added in the previous phase.
The secretary of Mines, Flavia Royón, has just been in Europe with the governors of Salta (Gustavo Sáenz), Jujuy (Carlos Sadir), Catamarca (Raúl Jalil) and San Juan (Marcelo Orrego), to tempt potential investors, not only in lithium but also in copper, the great local mineral treasure associated with the energy transition.
Salta and Jujuy are the local enclaves of the “lithium triangle” that Argentina integrates with Chile and Bolivia and which, together, contain 60% of the world’s resources. According to the World Bank’s work for CAEM, by 2030 the world will require three times more of the volume so far available of lithium carbonate, one of the forms of the mineral that Argentina produces from salt flats, with a lower level of impurities than others and a lower processing cost.
“In the coming years, an unprecedented expansion of the lithium industry is expected, linked to decarbonisation”: to electrify transport and store green energy, says the Bancomundialist work. And in this boom scenario, Argentine exports of this mineral they could grow “five times in the next six years”.
The country possesses 22% of the world’s resources, but its production today covers between 6 and 8% of demand, according to the multilateral organization. There is so much to do.
“Argentina is not even close to its potential,” Celorrio says. But, as the executive knows well, for this industry to thrive – like the copper industry -, in addition to access to foreign exchange and other macroeconomic conditions, it is necessary to solve how to get inputs into warehouses and how to get production to ports .
The challenge is no small one since, as the WB points out, logistics costs in the northern provinces are “50% higher than those in another region”. There is less density of routes and many are dirt roads. And the Belgrano Railway has a marginal participation, with several sections out of service.
According to the work, by 2031 the volume of lithium inputs and production will have grown 10 times compared to the current level, which requires an adaptation of the road and rail network, with the risk of preventing the boom.
Lime, sodium carbonate, hydrochloric acid, barium chloride and calcium, which come from other provinces or must be imported from Europe or Asia, are also essential.
Just to absorb the impact of increased traffic, The equivalent of $61 million per year is needed for road safety. Added to this are the funds requested from the Nation and the provinces for the basic maintenance of the routes that correspond to each jurisdiction, without taking into account the expansion of these networks or a more dynamic development of the railway.
A similar challenge arises in the energy sector. In just five years the electricity consumed by the North West fields will go from 400,000 megawatt hours to 1,600,000 m/h.
It is not clear whether this need can be covered with lines starting from the interconnected system or whether there will be a significant development of solar parks, exploiting the advantages of radiation in the North.
Today The companies themselves cover part of this energy requirement themselves.. Exar – a mining company based in Jujuy – has built 56 kilometers of gas pipeline to collect the product from the backbone network and purchases electricity from the Caucharí-Olaroz solar park, installed by the state-owned Jemse, of which it is a partner.
However, this is an alternative valid only for large projects, which reveals the need for both the central bank and the northern governorates to provide resources for the new lines.
The mining sector is one of those supported by public policies in recent years and Javier Milei’s government promises to maintain this line.
Through the abolished and now lapsed draft Law on the Bases and Starting Points for the Freedom of Argentinians, called the Omnibus Law, the Government worked to cover the fiscal deficit by applying withholdings of 15% on unregistered activities or increasing them from 30 to 33% those applied to the soy complex. But it kept the export duty on lithium carbonate at 4.5%.
The transfer of Flavia Royón from Sergio Massa’s Energy Secretariat to Mining, under the administration of La Libertad Avanza, consolidates the supposedly good relations with the mining companies. The official knows the sector and is an accepted interlocutor for companies in the sector, which in this administration as in the previous one are worried about access to foreign currency and the fear that their income will be captured by a new tax.
Another sensitive factor is the price of lithium, which in one year has fallen from almost 80 dollars a ton to the current 16 dollars because China, the world’s largest consumer, has slowed its demand.
According to the manager of an economic group with investments in the area, the Argentine projects have been conceived with a value of around 20 dollars a ton in the medium term, so those who have invested will not withdraw the bet due to the current drop in prices. The global lithium market is still small, volatile and opaque. But a tempting opportunity for Argentina to establish itself as a protagonist, if it resists the ups and downs and guarantees the infrastructure that will allow the miracle.
Source: Clarin
