Argentina Lithium Project Pipeline

Argentina, Chile, and Bolivia make up the lithium triangle which are thought to contain roughly half the world’s known lithium. According to the US Geological Survey, Argentina has an estimated 19.3Mt of the world’s 89Mt lithium resources. Bolivia (21Mt), Chile (9.8Mt), and Australia (7.3Mt) round out the top four countries in terms of estimated resources.

It is Argentina though that is set to see major growth in terms of lithium production over the next few years. Argentina, the world’s fourth largest lithium producer, is expected to leapfrog Chile in the short term. It has been able to take advantage of less favorable government policies in Chile and Bolivia to attract a considerable amount of investment over the last few years that is now set to pay off with new projects coming online. 

What Next for Argentina’s Lithium Industry?

There are over 30 projects at various stages advancing in Argentina. From advanced exploration phase to feasibility phase. Argentina’s current 40,000 mt of lithium carbonate production could triple in the next year based on the current project pipeline. Some analysts believe that Argentina could produce 152,000 tons of lithium carbonate in the next 12 ro 24 months as projects and expansions hit their production targets.

For Argentina, this could mean a new significant income from exports. Desperately needed in a country that is trying to dig itself out of an economic hole. Currently, it is projected that external sales of lithium amounted to US$835 million in 2023, a figure that could multiply to US$8.73 billion in 2030, according to projections from the National Mining Directorate.  In 2022, the main destination for Argentinian lithium exports was China — 41.5% of total sales abroad — followed by Japan at 30.7%, South Korea 12.8% and the US 9%.

Prices have come down from 2022, when they were US$80,000/t to below US$15,000 in February 2023. This is very concerning for the industry as producers are eliminating dividends, idling production, and delaying expansions. Although, Argentina sits in a great position as a low-cost producer due to accessing lithium from brines compared to hard rock.

Analysts have stated that feasibility studies of many Argentinean projects consider a price of US$13,000 per tonne, so at current prices the projects would not be as profitable as originally expected and the recovery of capital would be slower.

Despite short-term volatility, the long-term forecast for lithium remains positive. Lithium is crucial for decarbonization efforts, especially in the EV sector. While low prices have led to supply cuts and delays for some companies, analysts are predicting that prices could bottom out in 2025 and start increasing again after that as the market balances itself out.

Conclusion

Argentina has taken a different approach to developing its lithium industry compared to its neighbours. This has positioned the country as a leading investment destination, potentially putting Chile’s position as the number 2 producer at risk.

There are still challenges for Argentina to overcome.  Capital controls, lack of local suppliers, and lithium prices are the most immediate challenges. In addition, many of the projects are located in Northern Argentina where infrastructure and poor roads are increasing logistical costs.

As more projects come online, there will be more focus on the environmental impact, particularly water consumption. DLE technology is certainly important, but it has not been deployed yet on an industrial scale in Argentina. The reinjection of water is still complex and needs to be better studied.

Pilot plants at some projects demonstrate that DLE can achieve a yield of over 90%, with a processing period of about 24 hours, while the traditional process (natural evaporation in pools) offers less than 50% yield in 18 months. Promising technology if it can be scaled.

While Argentina is looking quite favorably in the short term as new projects already operating or under construction come online, current lithium prices will delay investment decisions for other projects, meaning that further growth could be slower than expected.

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