Momentum behind Argentina’s lithium mining boom is picking up fast.
The country is thought to be on track to match — and potentially even surpass —neighbouring Chile as Latin America’s leading lithium producer by 2030, with investors and operators from across the globe scrambling to get involved in its burgeoning ventures.
Lithium, sometimes referred to as “white gold” due to its light color and high market value, is regarded as a critical component of the energy transition. The lightest metal in the world, lithium is commonly used in electric vehicles, cellphones and rechargeable batteries for laptops.
At present, Argentina has two lithium extraction projects, one in the northern province of Catamarca and another in neighbouring Salta. Both operations are predicted to double production in 2024 and an additional 10 projects are currently under construction.
The growing momentum behind the country’s mining boom means that analysts at Eurasia Group expect Argentina’s lithium production to grow fivefold next year and approximately tenfold by 2027.
Eurasia Group said one “underlying force” that may ultimately hamper Argentina’s emerging lithium industry would be a plunge in global demand and prices below analyst expectations. They note, however, that this prospect appeared increasingly unlikely. “Argentina’s opportunity is now its own to embrace or lose,” they added.
Prices of lithium carbonate in China traded at roughly 166,500 yuan ($36,375) ahead of the country’s annual “Golden Week” holiday, reflecting a fall of nearly 70 per cent when compared to the same period last year.
Looking ahead, however, demand for lithium is expected to be supercharged by the rising deployment of clean energy technologies and some analysts believe prices could spike to record highs as the world begins to face a shortage.
“Argentina has infinite untapped resources when it comes to mining. We’re talking about a new Chile if not more — with the key ingredient being time,” Mariano Machado, principal analyst for the Americas at Verisk Maplecroft, a global risk intelligence firm, told CNBC.
“When it comes to lithium (in Argentina), you cannot skip but you can fast forward that process, so it really reduces that exposure,” he added.
“We’re seeing investors and operators from all walks of life coming into the country; Russian, Canadian, Chinese, American, you name it, that’s happening — which is very interesting.”
Argentina vs Chile
Chile is the world’s second-largest lithium producer after Australia, and a refiner of the essential battery metal.
Leftist President Gabriel Boric announced in April that the state was taking a majority stake in the country’s lithium industry, dismaying some business leaders.
The move was interpreted as a quasi-nationalisation of Chile’s industry, with private companies now needing to partner with the government in order to exploit the country’s lithium resources.
“Everyone thinks in Latin America, when it comes to mining and lithium, Chile comes to mind. The thing is, in particular within the mining landscape in Chile, lithium becomes kind of like a dark spot because of the state’s desire to interject in the industry,” Verisk Maplecroft’s Mr Machado said.
“Whereas in Argentina, think about it as kind of like a yin and yang situation. Overall, an obscure situation but when it comes to lithium, it is a very bright spot,” he continued.
“It is a very dynamic situation right now. So dynamic that what we’re anticipating is if the ramp-up gets really serious, we will start seeing hosting communities saying, ‘Hey, we want to be in. I want you to change this place, to transform it. I want to be part of the energy transition but in an active way,’” Mr Machado said.
“Argentina has already become and will become kind of like a hotspot in terms of lithium and all of that brings about good and bad news.”
Argentina’s northern provinces have a history of extractive activities — and opposition to them from the local community.
Analysts have warned that the lithium industry’s domestic expansion could trigger protests over water access, environmental concerns, and indigenous disputes.
Indeed, in early August, indigenous protesters from the northern Jujuy province arrived in Argentina’s capital of Buenos Aires after a week-long caravan in defense of their territories and natural resources.
The protests took place shortly after a controversial change in legislation gave lithium mining companies greater access to indigenous lands.
What about China?
China is expected to play a pivotal role in developing Argentina’s lithium sector in the near term, with Western producers likely gaining market share in the longer term. However, an upcoming presidential election may threaten Beijing’s role as a prominent trading partner and major creditor of infrastructure projects.
General elections in Argentina are scheduled to take place on October 22 following a shock victory for far-right libertarian economist Javier Milei in August’s presidential primary.
Mr Milei, who received 30.5 per cent of the vote on August 13, has pledged that the country will no longer work with “communist” regimes if he wins the election.
Analysts say Mr Milei’s unpredictable nature and lack of a political track record make it difficult to understand how he will oversee the lithium industry if he comes to power.
CNBC