An operator holds the Argentine flag at the facilities of the Cauchari-Olaroz lithium project in Jujuy, Argentina. Argentina already, with only two production projects, is the fourth largest global producer of lithium, but it is preparing to take a step back. Photo Secretariat of Energy.
At a sumptuous lunch this month in Buenos Aires, 400 mining executives and government officials gathered at toast to riches of natural resources in Argentina, in the middle of a business euphoria not seen since the country’s first attempt to exploit Vaca Muerta’s unconventional oil deposits a decade ago.
The attraction for investors this time is lithium from Argentina. There is a imminent shortage of this rare metala raw material key to batteries used in electric vehicles.
Elon Musk gave Tesla signs may engage in mining to ensure supply. Chinese and American companies clashed in a Bidding war for Argentina’s lithium resourceswhile Rio Tinto Group and Zijin Mining Group The Co investing more than US $ 1,000 million in the country.
“If Argentina didn’t, it is almost impossible for the lithium market to remain well suppliedsaid Michael Widmer, director of metal research at Bank of America.
Argentina has 13 lithium projects, more than abroad. The United States has 10.
Will Argentina be a heavyweight?
The world needs that supply of lithium be quintupled by the end of the decade to meet expected demand as the electric vehicle revolution reaches its peak, according to BloombergNEF.
may be the Argentina’s last chance To go beyond its traditional supply of soygrain and cattle, to be a world heavyweight in a new industry.
The country has 19 million metric tons of lithium resources which has not yet been exploited, the double that of Chile. However, Argentina has in the long run struggling to attract valuable and ongoing capital flows necessary for the widespread exploitation of oil, natural gas, gold and silver confined underground.
Salar del Rincón, in Salta. Photo by Reuters
The Vaca Muerta unconventional oil and gas formation in Patagonia is probably the best example. A decade ago, it was all rumors and promises. had special exemption from capital controls that attract Chevron.
But the drop has never been a flood: Argentina’s general problems and intervention in fuel markets they slowed progress.
Today the largest lithium manufacturer in the world, Albemarleplans to continue exploring Antofalla salt flatin Argentina, an area farther and less developed than in Australia and Chile, where the company mines.
“We can’t always choose where our resources are. Now that the electric vehicle market is accelerating and demand is really growing, we need to develop that next resourcesaid Kent Masters, CEO of Albemarle.
This is a difficult task. A drop in price two years to mid -2020 hold some new mines and drove out investors, which means that additional supply does not grow fast enough.
“Now the demand is more mature. It’s more reliable, ”said Jon Lamb, portfolio manager at mining and metals investment firm Orion Resource Partners.
Consulting firm Benchmark Mineral Intelligence estimates that The Lithium market will grow to US $ 40 billion by 2030compared to US $ 1,200 million in 2015.
Postco Holdingsone of the largest manufacturers of steel, is investing US $ 830 million at a lithium hydroxide plant in Argentina.
This investment is important, considering that Australia and Chile will soon lose their dominance in the lithium industry. Although Australia and Chile represents 76% of production, its share in the project pipeline is only about 34%, Widmer of BofA said in a note.
Argentina will overtake Chile
Argentina will surpass Chile in lithium production by 2027according to Daisy Jennings-Gray, a senior analyst at Benchmark Mineral Intelligence, which advises governments on critical minerals.
The Cauchari-Olaroz project of Lithium Americas and Ganfeng Lithium is likely the first produced large volumes in 2023.
Argentina, Chile and Bolivia — the so -called triangle of lithium– represent More than half of the world’s resourcesand looking for ways to collaborate to go beyond metal extraction and produce products of higher value.
Lithium project of Liex mining company, of Neo Lithium, near Fiambala, Catamarca. Photo by Bloomberg.
“The three countries have different perspectives on how to make lithium, but we have a shared perspective on what to do next here, ”said Argentina Mining Secretary Fernanda Ávila. “We are working together to develop new technologies and strategies to go beyond the value chain ”.
In the history of capital controls, which Argentina uses to protect its foreign reserves, the country struggles with the perception of being “like ‘Hotel California.’ You can enter whenever you want, but unable to get out”, Said Andy Bowering, of American Lithium, which has a project in Peru.
Argentina requires companies to convert export revenues into pesos. They are then prevented from freely accessing the dollars again and transferring them abroad.
For example, some companies need raw materials, including oil company YPF refinance dollar bonds because the country does not allow him to buy enough foreign currency to repay the debt.
However, while looking for ways to grow its economy, Argentina has eased access to dollars for the oil sector to increase its production.
The world’s hunger for lithium is beyond doubt, said Jon Evans, chief executive of Lithium Americas, who last year defeated China’s Contemporary Amperex Technology, the world’s largest battery manufacturer, which bought Millennial Lithium .
The three way battle for Millennial’s lithium assets in Argentina lasted four months and with two Chinese suitors.
Argentina “has the best lithium opportunity in South America”, said Evans.
NE
Source: Clarin
