Chili It is the world's second largest producer of battery lithium carbonate (LCE), an essential component of electric car batteries, and has long surpassed Argentina and Bolivia in attracting investment for its extraction. But a series of events is changing the call “lithium triangle” from Latin America.
Bolivia, with the largest deposits in the world, has secured new multi-million dollar investments, and the poorly regulated Argentine lithium sector is advancing at full speed. On the other hand, in Chile there are no new projects underway and the reform of the sector planned by President Gabriel Boric, which aims to expand the participation of the State, has not yet been completed.
And over these three actors there is a global competition that is advancing at great speed. Production increases in Australia and Brazil, as well as discoveries in the United States, have increased pressure to secure new investment in a rapidly expanding market. And the multinational Exxon announced its foray into lithium production, its first major investment outside of fossil fuels (see attached note).
With alternative battery technologies already in development, Argentina, Bolivia and Chile have a limited window of opportunity to capitalize on the flow of foreign capital heading toward the Andean salt flats before the path of least resistance shifts elsewhere, the researchers said. analysts to AQ.
“There are no new extraction contracts” that have reached production stages since two existing contracts in Chile were closed in the late 1970s, he told AQ Thea Riofrancos, professor of Political Science at Providence College.
While Chile sinks…
Uncertainty around Boric's lithium strategy has not helped Chile's growth prospects, as no new investments have been announced since April and pre-existing contracts remain uncertain. Meanwhile, global demand for LCE is expected to increase 25% annually over the next decade.
That does not necessarily mean that Chilean production will not resume its growth once the regulatory framework is finalized. “Investors have wanted to invest in Chile and have faced barriers to entry, and this could remove some of those barriers,” Riofrancos said, referring to Chile's lack of investment in new lithium projects, even before the announcement of the lithium strategy.
And we must not rule out the two existing plants in Chile: Sociedad Química y Minera de Chile (SQM) and Albemarle, the mining companies that respectively operate the two plants, plan to increase production in the Salar de Atacama between 140,000 and 180,000 tons of LCE by 2030, according to José Hofer, former analyst at the Chilean Ministry of Mining and business intelligence manager at SQM.
Still, Hofer stressed that the scope of that expansion depends on the results of ongoing contractual negotiations between SQM and Codelco, the Chilean state copper company.
Argentina, forward
While many parts of Argentina's economy are considered areas where government intervention is frequent and forceful – for example, its highly regulated labor market and a bewildering variety of exchange rates – when it comes to the decentralized lithium sector and regulated by the provinces, the story is different.
Unlike the centralized strategies of Chile and Bolivia, lit resourcesio of Argentina belong to the provinces.
They – and not the federal government – collect 3% royalties for lithium extraction (compared to a cap of 40% in Chile and 45% in Bolivia), and the business environment is relatively free of state oversight for the companies. foreign mining companies, which attracts a varied range of investors to the provinces from Jujuy, Salta and Catamarca.
In 2022, Argentina produced 33,000 tons of LCE, the second country in the region and the fourth in the world. A third mine came online last June, two other projects will be completed this year and three are under construction. The country has another 41 projects in the initial phase whose completion is scheduled for after 2025.
According to government data and miners' estimates, Argentina's domestic lithium production is expected to increase fivefold by the end of 2025, equivalent to a boost of about 1% of current gross domestic product. “Argentina will be able to exceed 200,000 tons of LCE in 2032-2035,” said Hofer.
Regarding the future of the lithium sector in Argentina, the social impact of the extraction of the metal is planned. “The expansion of these lithium plants will surely cause some type of displacement or conflict,” said Ernesto Picco, author and researcher at the National University of Santiago del Estero. Picco noted that “the environmental impact of lithium extraction has not yet been fully measured.”
Provincial regulation of lithium miners It's like “the law of the jungle”, with limited communication channels between companies and local communities. A social response is already beginning to emerge: for example, at the Tercer Malón de la Paz, a protest that made headlines last August when protesters in Buenos Aires demanded greater community consultation and broader engagement. with the water rights of the indigenous communities of the province of Jujuy.
Chile and Argentina recently signed a “memorandum of understanding” to establish the Binational Lithium and Salt Flats Working Group, a milestone that institutionalized the collaboration that both States have deployed since June 2022 in order to “exchange experiences between companies and scientific teams, the formation and training of human resources and the stimulation of the development of productive chains related to this industry”, one of its shared areas with the greatest productive projection.
Additionally, Tesla Inc. is working to start operations in Chile. The company registered the Tesla Chile SpA brand, according to a publication in the Official Gazette of Chile dated September 28. The unit can carry out activities such as the sale and manufacture of cars and those related to the “generation of energy and electricity.”
For its part, in Argentina, the Canadian-Argentine mining company Lithium will expand its Rincón Oeste and Antofalla Norte lithium projects, in the north of that country, after signing agreements to add two mining concessions on neighboring salt flats.
And Bolivia?
Despite having the largest confirmed lithium resources in the world, Bolivia, the third vertex of the triangle, has so far been unable to extract them since the industry was nationalized in 2009, and production only reached 600 tons of LCE last year from a pilot project.
However, this dynamic may be changing: two recently signed projects worth US$1.4 billion each, between the state-owned company Yacimientos de Litio Bolivianos (YLB) and Chinese and Russian companies, aim to produce 100,000 tons of LCE per year by the end 2025 in the immense salt flats of Uyuni and Coipasa. Bolivia and the Indian company Altimin also signed a two-year, extendable agreement to develop technology for the manufacturing of lithium-ion batteries. And in mid-December, Bolivia announced an agreement for US$450 million with the Russian state-owned Uranium One Group, for the exploitation of this mineral.
Known for having the most techn
ically complex deposits, lithium projects in Bolivia must overcome a spiral of costs, insufficient infrastructure and a deficit of qualified local labor, in addition to the new requirement to use a novel technology that has not been tested at all on a large scale. Therefore, experts are skeptical. “It is impossible” for these projects to meet their production goals, says Chris Berry, founder and president of the consulting firm House Mountain Partners.
“This is going to take years. I would be surprised if it happened before 2027 or 2029,” she adds.
With Chile's lithium sector stagnating and Bolivia's prospects uncertain, all eyes are on Argentina and whether its rise will bring prosperity and international relevance or social unrest that will derail the industry.
In any case, Argentina's fate will serve as an indicator to other lithium-rich countries in the region with great hopes for the future.
It is not yet clear whether the lithium industry will become part of Latin America's long history of tense relations with an abundance of mineral resources. But it seems that Argentina will have the next opportunity to write a chapter.
JACK QUINN
AMERICAS QUARTERLY Jack Quinn is a new energy reporter at 'International Business Times' UK and former editorial assistant at
AQ
.
Exxon is also betting on lithium
Exxon Mobil Corp. plans to become one of the largest suppliers of lithium for electric cars, marking the oil giant's first major foray away from fossil fuels in decades. Exxon will extract the metal from underground saltwater deposits in the Smackover formation, Arkansas, using a novel method called direct lithium extraction (DLE) that is not implemented at scale.
Exxon aims to reach its first lithium production by 2027 and increase it to the equivalent of one million electric vehicles a year by 2030. That level of production would rise to about 100,000 tons a year, said Dan Ammann, president of Exxon's Low Carbon Solutions. during an interview. It would also make Exxon one of the top ten producers globally.
“We are producing lithium here domestically instead of importing it from China or other places,” Ammann said, adding: “We are going to do it with a much smaller environmental footprint and achieve a profitable, high-growth business.” The success of the EDL could be revolutionary for global production, as it would free up vast metal resources in North America, reducing the need for imports. It could also be cheaper and more ecological than the traditional production carried out in South America, where nearly half of the world's reserves are located. Ammann also said the company will consider expanding lithium production globally. The project would help Exxon gain a large share in a market it estimates will be
will quadruple by 2030,
and would help mitigate losses resulting from the expected reduction in gasoline and diesel demand in the coming decades.
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