Argentina sets reference price for lithium exports

Official reference price to bring additional transparency to the local lithium sector

Customs authorities in Argentina have set an official reference price for the country’s exports of lithium carbonate, a move that was intended to add transparency to the government’s monitoring of the sector and to the collection of royalties from local exporters.

Argentina’s customs office, the Dirección General de Aduanas (DGA), has set a reference price of $53 per kg that will come into effect from Tuesday, June 7 and will apply to local lithium exports to the United States, Canada, China, Taiwan, Hong Kong, South Korea, Japan, Thailand and the Philippines.

In an official statement released on government channels last week, the authority described the action as “disarticulating irregularities [that have been] detected and investigated over the past two years in lithium carbonate exports.”

It added that the reference price would bring additional transparency to the local lithium sector, describing it as a “tool to oversee foreign trade.”

Argentina’s government collects royalties on the country’s exports of lithium that are calculated based on the price reported by the exporting company to the local authority, but this has been a source of disagreement between companies and the government in the past.

The government will now be able to employ the official reference price as an additional tool in the calculation of lithium royalties, Fastmarkets understands.

“Through the reference value for the export of lithium carbonate, Customs strengthens its ability to oversee foreign trade and avoid under-invoicing practices when it comes to foreign sales [of lithium],” the agency said.

Argentine lithium exports in 2021 were estimated at 27,000 tonnes, worth some $185 million, according to government data.

The country currently hosts two active lithium production operations, run by Livent and Allkem, as well as a long list of junior projects in various stages of development.

In a statement on June 6, Allkem said that the reference price would be “used by regulatory authorities when reviewing export sales of lithium chemicals to prevent under-invoicing and improve pricing transparency,” rather than for duty calculations.

“Allkem does not expect that it will have any material effect on product exports, realized prices or profitability,” it added.

Lithium prices have increased sharply in the past two years since the market bottomed-out in 2020, owing to a fast rebound in demand from the downstream battery sector for electric vehicles.

Fastmarkets assessed the price for lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea, at $71.00-75.00 per kg on June 6, or about 870% higher than the $6.50-8.50 per kg that was assessed two years earlier in June 2020.

Since February this year, spot prices have exceeded and remained higher than the reference set by the DGA.

“The announcement should have a limited effect on the spot market, given that lithium carbonate has been trading above $53,000 per tonne for some time now,” Jordan Roberts, battery raw materials analyst at Fastmarkets, said. “We expect prices to remain at these levels because downstream demand continues to grow. This is a sentiment clearly shared by the Argentinian government.”

It was still unclear whether and how the reference price would be applied this year as part of the royalty calculation process. Local exporters have operated for almost half-a-year without the reference price in place. By now, their books will hold long-term contracts agreed in earlier months, plus spot sales in previous months, as well as spot sales and new contract sales for the remainder of the year.

Local industry associations have reacted negatively to the setting of a price reference.

According to the Argentine Chambers of Commerce for Mining Businesses (Cámara Argentina de Empresarios Mineros - CAEM), the new norm “could have a negative effect on investment in Argentina and on the development of projects that are in the works.”

It added: “The change in conditions could affect the long-term planning that is required by investors.”

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