MethodologyContact usLogin
During a recent high-profile lithium conference in the northwestern Argentinian province of Salta – part of the Andean “Lithium Triangle” region that includes parts of Chile and Bolivia – producers, authorities, analysts and experts were quick to dismiss a possible “nationalization” of the battery raw material, such as has been seen in Chile.
“Argentina is currently the second-largest in terms of lithium reserves, but we are only the fourth-largest in output,” the president of Argentina’s Chamber of Mining Companies (CAEM), Franco Mignacco, said on August 9 in Salta. “A lot of work has been done in the past 10 years and much more needs to be done [in future].”
Three governors at the conference – who administer the Salta, Jujuy and Catamarca provinces – were very vocal about maintaining the country’s provincial model of resource exploration, instead of going national. Not only would it ensure that their influence stayed strong, but they believed that it made private-sector partnerships easier and licensing more streamlined.
On the sidelines of the Lithium in South America conference, Mignacco told Fastmarkets that foreign exchange controls currently in place in Argentina would need to be loosened if the country were to secure more than the $7 billion that would be needed in capital expenditure for the first three lithium projects in Argentina to boost capacity.
“The road to higher production will be very capital-intensive, and we need the private sector to work together with governments,” the CAEM president said.
Throughout the conference, not only executives but analysts and politicians acknowledged that Argentina could find it difficult to attract foreign private investment, depending on the exploration model for lithium.
“We need to differentiate ourselves from [the model in] Bolivia or Chile,” Jujuy governor Gerardo Morales said during the conference. This sentiment was echoed by the governor of Salta, Gustavo Sáenz, and the governor of Catamarca, Raúl Jalil.
“I think it takes absolute political maturity for these three governors from different parties and different ideologies to work toward a common goal like this,” Sáenz said.
In April this year, Chilean President Gabriel Boric said that his country intended to nationalize lithium resources. In theory, mining rights are already under national control in the South American country and must be granted by the central government, but in practice, state-run copper giant Codelco was selected to spearhead new ventures.
Ahead of the presidential election in Argentina later this year, the local press has reported that the ruling left-wing Justicialist Party (PJ) would have plans for a similar “lithium nationalization” – although this has since been denied.
The first round of voting took place in Argentina on August 13, with PJ taking fourth place. Far-right candidate Javier Milei was in the lead with 30.0% of the vote, followed by Patricia Bullrich with 28.3% and Sergio Massa with 27.3%.
The outlook from Fastmarkets research is that, by 2029, Argentina will have taken over as the world’s third-largest lithium producer behind China and Australia, while Chile will have fallen to fourth place. The forecast was for lithium carbonate equivalent (LCE) mine supply from Argentinian producers to reach 428,100 tonnes per year, compared with only 38,459 tonnes last year.
Over the next decade, the average compound annual growth rate was calculated at 28% for Argentina, one of the fastest globally, but only 5% for Chile.
“With such large growth, we expect Argentina to overtake its neighbor, Chile, where supply expansion is almost solely attributable to the incumbents already operating,” Fastmarkets’ battery raw materials analyst Jordan Roberts said on Wednesday, August 16. This would mean that no significant project was expected to start producing in Chile during that 10-year period.
Fastmarkets research’s longer-term outlook, to 2033, was for Chinese supply of LCE to reach 893,800 tpy; Australia, 779,625 tpy; and Argentina, 589,350 tpy. Chile’s output would fall to 376,000 tpy, with Canada in fifth place, 158,223 tpy.
“Argentina has the resources, such as lithium, that will be key to a greener world,” Argentinian national mining secretary Fernanda Ávila said on August 9. “Now what we need is to move toward being a mining country, such as Chile is today.”
Fastmarkets’ assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, was most recently at $30.00-34.00 per kg on August 18. This compared with $36.00-38.50 per kg eight days earlier amid a seasonal market lull.
The price was also down from $38.00-42.50 per kg on July 20.
Fastmarkets research forecasts a 72,400-tonne market deficit this year, with carbonate prices in China, Japan and Korea expected to average $45.00 per kg during the year, compared with $71.24 per kg in 2022. The lithium price was expected to fall to $39.00 per kg on average in the last quarter of this year, however, which would mean a recovery from recent spot levels.
During the conference in Salta, company executives and experts warned that Argentina could face a more political obstacle to becoming a global lithium supply leader. Although Chile has no new significant projects coming online, it does have something that Argentina does not: a free trade agreement with the US.
“The US and Europe do not have currently, nor are expected to have, the production necessary for their ambitions amid recent geopolitical rearrangements,” Rio Tinto’s managing director in Argentina, Guillermo Caló, said on August 9. “But Argentina has no free trade deal with the US, so benefiting from the [conditions set out in the US Inflation Reduction Act] is more difficult.”
The IRA, as it is known, was signed into law in August 2022 and was designed to help secure critical materials supply to the US. In the year since then, there have been no real material developments, and qualifying for its tax credits, for example, has proven to be tough, as noted by market participants in Salta.
“What Argentina needs to do is to prove itself as a reliable lithium supplier,” Ignacio Celorrio, the Latin America regional president for Lithium Americas, said. “It can be at the center of a largely sophisticated global development.”
In terms of supplying the US with lithium for batteries, Argentina could work around not having a fully fledged free trade deal if it can show that it is not a “foreign entity of concern” – and executives and authorities are wary that changes in regulations, for example, could see the country added to that list.
“This is a key moment,” Livent corporate affairs director Ignacio Costa said on August 9. “The US is trying to secure its [lithium] supply and take leadership [in the Western battery space] from China. Argentina can do it.”