Wed. Nov 13th, 2019

Argentina lives a "boom" of lithium that promises to strengthen its world leadership

Argentina is experiencing a "boom" in lithium, with two projects underway and another 41 in its portfolio, a scenario that promises to multiply the country's productive and export capacity in a market in which it is already one of the world's leading players.

The two salaries that Argentina has in operation – Olaroz (participated by the Australian Orocobre, the Japanese Toyota and the local Jemse) and Fénix (of the American Livent) – represent 7% of world production, behind Australia (61% ) and Chile (16%).

Argentina owns 12% of the reserves and 23% of the world's lithium resources, but the latter have been steadily increasing – they have grown 97% in the last three years – thanks to the exploratory "fever" of "white gold" .

"Measured resources are being greatly increased because there is a real explosion of exploration activity. Exploratory budgets for lithium have increased more than 900% in the last three years," explains the Secretary of Mining Policy of Argentina, Carolina Sánchez, in an interview with Efe.

Investments in 2018 amounted to 241 million dollars and will reach 260 million this year, but they are expected to experience a strong increase because portfolio projects add up to about 40 and, if they move towards the production phase, they will demand numerous disbursements.

The two production salt flats are already in the expansion phase to double their current capacity and two other projects – Cacharchari-Olaroz and Centenario Ratones – are under construction and will be operational in 2020 and 2021.

Another 16 projects are in intermediate stages, ranging from advanced exploration to operating with a pilot plant, and could go into production between 2020 and 2025.

In addition, there are 23 other projects in the initial exploration phase.

With this portfolio of initiatives, the outlook for Argentina is promising.

According to official projections, with a basic scenario of four projects in operation, the country could reach in 2024 lithium exports for 1,200 million dollars and investments in the sector for 1,442 million dollars, although other potential scenarios triple those figures.

According to Sánchez, with this horizon Argentina may "be fighting the second position with Chile".

However, it clarifies that all the world's largest suppliers will continue to grow thanks to a sustained demand that comes, especially, from the manufacturers of batteries for electronic products and electric vehicles.

Almost 100% of the lithium carbonate that is extracted from the salt flats and their chemical derivatives, hydroxide and lithium chloride, are exported to China, the US, Japan and South Korea, where the large battery manufacturers are.

To explain the reasons for this "boom", Sánchez points out that Argentina has a very good quality of resources in its salaries, which reduces production costs and increases the competitiveness of projects.

"There is also a legal and institutional framework that works and gives certainty to investors," says Sánchez, who recalls that the lithium sector is protected by a law promoting mining investments that provides fiscal stability for thirty years.

According to data from the Argentine Chamber of Mining Entrepreneurs, the six most advanced projects, which add investment announcements worth 2.6 billion dollars, would increase the country's lithium production capacity by 450% by 2021.

"If at least nine projects are completed by 2024, Argentina's production would increase by ten," said Alejandro Ovando, director of IES Consultores, specializing in sectors such as mining, among others.

Ovando explains that lithium is "very profitable", requires much less investment volume than metal operations, such as gold or copper, and requires shorter deadlines for the production of projects.

Lithium has even aroused the interest of oil companies.

YPF, controlled by the State and the largest hydrocarbon producer in the country, has publicly expressed interest in this segment, while the private Pluspetrol acquired earlier this year the shares of Canadian LSC Lithium in three exploration projects in the north from the country.

"The oil companies seek to add value. Service stations (gas stations) in the future will have battery chargers. Worldwide there is a 12% annual growth in sales of electric cars and oil companies do not want to lose that business. It's the future "says Ovando.

Natalia Kidd

. (tagsToTranslate) Argentina (t) promises (t) empower (t) world leadership (t)

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