Argentina’s Lithium Project Pipeline

Post available in: English

Argentina, Chile, and Bolivia comprise the lithium triangle, which is thought to contain roughly half the world’s known lithium. According to the US Geological Survey, Argentina has 19.3Mt of the world’s 89Mt lithium resources. Bolivia (21Mt), Chile (9.8Mt), and Australia (7.3Mt) round out the top four countries in terms of estimated resources.

Argentina, though, is set to see major growth in lithium production over the next few years. Argentina, the world’s fourth largest lithium producer, is expected to leapfrog Chile in the short term. It has taken advantage of less favourable government policies in Chile and Bolivia to attract considerable investment over the last few years. It is now set to pay off with new projects coming online. 

Operating Projects

What Next for Argentina’s Lithium Industry?

Over 30 projects are advancing in Argentina, from the advanced exploration phase to the feasibility phase. Argentina’s current 40,000 mt of lithium carbonate production could triple in the next year based on the current project pipeline. Some analysts believe that Argentina could produce 152,000 tons of lithium carbonate in the next 12 to 24 months as projects and expansions hit their production targets.

For Argentina, this could mean a new significant income from exports. It is desperately needed in a country trying to dig itself out of an economic hole. It is projected that external sales of lithium amounted to US$835 million in 2023, a figure that could multiply to US$8.73 billion in 2030, according to projections from the National Mining Directorate.  In 2022, the main destination for Argentinian lithium exports was China — 41.5% of total sales abroad — followed by Japan at 30.7%, South Korea 12.8% and the US 9%.

Prices have fallen from US$80,000/t in 2022 to below US$15,000 in February 2023. This is very concerning for the industry as producers eliminate dividends, idle production, and delay expansions. Argentina is in a great position as a low-cost producer because it accesses lithium from brines rather than hard rock.

Analysts have stated that feasibility studies of many Argentinean projects consider a price of US$13,000 per tonne, so at current prices the projects would not be as profitable as originally expected and the recovery of capital would be slower.

Despite short-term volatility, the long-term forecast for lithium remains positive. Lithium is crucial for decarbonization efforts, especially in the EV sector. While low prices have led to supply cuts and delays for some companies, analysts predict that prices could bottom out in 2025 and start increasing again as the market balances itself out.

Conclusion

Argentina has taken a different approach to developing its lithium industry than its neighbours. This has positioned the country as a leading investment destination, potentially threatening Chile’s position as the number two producer.

Argentina still has challenges to overcome. The most immediate challenges are capital controls, a lack of local suppliers, and lithium prices. In addition, many of the projects are located in northern Argentina, where infrastructure and poor roads are increasing logistical costs.

As more projects come online, more focus will be on the environmental impact, particularly water consumption. DLE technology is certainly important, but it has not been deployed yet on an industrial scale in Argentina. The reinjection of water is still complex and needs to be better studied.

Pilot plants at some projects demonstrate that DLE can achieve a yield of over 90%, with a processing period of about 24 hours, while the traditional process (natural evaporation in pools) offers less than 50% yield in 18 months. If it can be scaled, DLE is a promising technology.

While Argentina is looking quite favourably in the short term as new projects already operating or under construction come online, current lithium prices will delay investment decisions for other projects, meaning that further growth could be slower than expected.

Ax Legal helps industrial technology, engineering, and service companies navigate the legal and commercial aspects of operating their businesses in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve their operations in the region, and protect their interests.

Over the years, our team of legal and commercial advisors has developed a track record of working with companies of all sizes in Australia, Canada, the U.S., and Europe. The one common factor connecting our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

Source and Contact: Cody Mcfarlane at cmm@ax.legal

(Visited 39 times, 1 visits today)

About Gateway to South America

Established in 2006, Gateway to South America began as a single office in Buenos Aires. Since then, it has grown into a vibrant regional network, providing professional real estate marketing services to clients in Argentina, Brazil, Chile, Paraguay, Peru, and Uruguay. If you enjoy reading our news site, please share it on your social media!

Want an edge on investing in Latin America? Get our Investment News first: Join 39,400 subscribers without cost to our English, Spanish or Portuguese posts for the latest real estate news in LATAM useful for new and experienced investors. Please note, this subscription is for Investment News only, not properties for sale.

Post available in: English

Comments are disabled
Real Estate and Investment News from South America
Visit us on LinkedInVisit us on FacebookVisit us on TwitterVisit us on Pinterest