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Mining, Mining Technology, Projects Tagged

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.

In terms of actual output, Bolivian production has been non-existent. Chile was a global top producer until a few years ago when it was surpassed by Australia. The Chilean industry has been held back due to lithium being classified as a strategic mineral which requires special permissions from the government. Although Chile has been producing lithium for some time, it has been unable to capitalise on its experience and attract the needed investment to grow production. 

The slow growth of the Chilean lithium industry has provided an opportunity for its neighbour, Argentina, who has taken a more liberal approach to developing the industry. The result has been an influx of foreign investment that is set to pay off over the next few years. In 2020, Argentina produced 33,000t of lithium carbonate which will increase 50,000t this year. There are estimates that Argentina could double production in 2023 and hit 175,000t in 2025.

Argentina has a healthy lithium project pipeline. There are already two projects in production with plans for expansions. This year, construction has started on several more projects and there are even more projects that are being explored.

Operating Projects

Fenix
  • The project is owned by Livent and started production in 1997
  • The company expanded then initial production to the current 20,000t/y of lithium carbonate. A further expansion will bring production to a total of 60,000t/y by the end of 2025.

Olaroz
  • Olaroz salt flat in Jujuy province produces 17,500t/y of lithium.
  • Operated by Sales de Jujuy, comprising Orocobre (72.68%) and Toyota Tsusho (27.32%), and state-run Jemse.
  • Further expansions will add 25,000t/y of lithium carbonate for a total of 42,500t/y.

 

 

Projects in Construction

Cauchari-Olaroz Project
  • The Cauchari-Olaroz lithium project is a 40,000 tonnes per annum (tpa) lithium brine project with a useful life of around 40 years.
  • The US$741mn project is a joint venture between Lithium Americas Corp (LAC) and China-based Ganfeng Lithium.
  • Construction is 90% completed. Access roads, platforms for the wells, warehouse buildings, a gas pipeline, lime plant, a 33kV power line, a 13.2kV distribution line, solid-state lighting and water pipes are complete.
  • Key areas of the processing plant are being prepared to begin commissioning shortly, supported by the completion of power line, gas line and water line connections. But the purification process to achieve battery-grade lithium carbonate is expected to start only early next year.
  • Lithium Americas and Ganfeng have begun planning stage 2, involving at least 20,000t/y, and continue to advance development of the exploration well field. Stage 2 is expected to start in 2023.

Centenario-Ratones Project
  • Eramet will control the project, with a 50.1% interest, and will retain operational management responsibility; its partner Tsingshan will finance the plant construction in exchange of a 49.9% interest in the project.
  • A pilot plant was installed in early 2020, providing a real-world demonstration of the quality of the lithium carbonate product, with a very high level of direct extraction efficiency (90%).
  • The project will use Eramet’s direct lithium extraction technology minimising water,
  • Construction of the lithium plant began in June 2022 with an initial capacity of 24,000t/y of lithium carbonate starting in 2024.
  • The project is expected to require am investment of US$400m. Production is expected starting in 2024.

Sal de Oro
  • Posco started construction of a US$830 million lithium hydroxide plant this year.
  • The plant will produce 25,000t/y of lithium hydroxide – enough to make batteries for 600,000 electric vehicles – starting in 2024.
  • environmental impact studies that are being carried out to increase the production capacity from 25,000tpy to 100,000 were analyzed. This level of production will be reached by 2026 and will require the estimated total investment of US$4bn.

Sal de Vida

 

  • Allkem (formerly Orocobre) is the project owner. The project has a total planned capacity of 45,000tpa.
  • The project development is divided into three stages. The first two stages will involve evaporation and production of primary grade lithium carbonate, with the third stage involving the refining of the primary carbonate into battery-grade lithium product.
  • Stage 1 construction has already started with the first pond completed and filled with brine. Commissioning the first string of operational ponds and construction commencement of the carbonation plant and progressing towards operational readiness started in the second half of 2022. Stage 2 and 3 will start shortly after production in 2023.

 

Challenges

Argentina faces the same environmental concerns as Chile in terms of expanding lithium production. Communities are worried about disrupting fragile ecosystems by taking water from critical areas. Many companies are focusing on DLE to reduce water usage, but the technology has not been deployed at scale yet.  

Other challenges include lack of infrastructure and power where these mines are being built. Many of the lithium projects are in areas to the far north of the country where there has been a lack of government funding over the years.

Lastly, the foreign currency restrictions currently in place also represent a challenge to the sector’s expansion since there are limitations on companies taking profits overseas. For miners this may not be an immediate concern as they seem to be happy to reinvest profits back into expansions but for technology and service suppliers this can create issues. Payment of their services and products are delayed and they are often pressured to have local entities with no means to repatriate funds.

Added Value

Argentine has inaugurated a US$2.5 million lithium-ion batteries and cells plant in La Plata. The facility is expected to go into production in December, targeting 300 cells of 64Wh per day.

Investment was provided by the ministry of science, technology, and innovation (Mincyt) and the energy and research company YPF-Tecnología. The plant required 200mn Argentine pesos (US$1.5mn) for infrastructure and US$2.5mn for the equipment.

Some criticisms of the project are that the battery cost could be higher given that some components need to be imported.

Conclusion

Argentina has taken a different approach to developing its lithium industry. This has positioned the country as a leading investment destination for lithium production. The lithium pipeline is advancing. New projects will catapult the country into one of the largest global producers putting Chile position as the number 2 producer at risk.

Argentina has been able to make a small investment into battery production which will be beneficial as the country looks to build a value-added industry around its lithium resources. Something that Chile has tried but has been unable to do yet. That investment and know how from the small pilot could potentially trigger further investment in the coming years.

The bigger story is that Argentina has been able to attract more investment than Chile. While Chile has created uncertainty around its industry with complex rules, Argentina has made it relatively easy for companies to explore and develop projects.  

There are still challenges for Argentina to overcome. Structural debt issues, ever changing taxation policies, and capitial controls are the most immediate challanges. As more projects come online, there will be more focus on the environmental impact it may have on fragile ecosystems. DLE technology is certainly important but how effective it will be is still in question. Over the next couple years, these questions should be answered and hopefully Chile is not left in the dust. 

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal

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