By Lucila Sigal
BUENOS AIRES, April 24 (Reuters) - In Argentina's
mountainous north, a strong pipeline of lithium projects close
to coming online looks set to unlock a wave of production that
could see its output of the key electric vehicle battery metal
as much as triple within the next two years.
The world’s fourth largest producer of the silvery-white
metal sits within the so-called "lithium triangle" and has been
luring investment from Canadian to Chinese mining firms with a
regional and market-led model, even as a wave of resource
nationalism has spread in the region.
Neighboring Chile, the region's top lithium producer, last
week unveiled plans for a state-led public-private model,
spooking investors. Bolivia has long maintained strict control
over its huge though largely untapped resources, while Mexico
nationalized its lithium deposits last year.
In Argentina, despite state energy firm YPF starting to explore for lithium last year, the sector has
largely been driven by private enterprise and regular approvals
of new projects as the government has looked to bring in more
export dollars through mining, a rare bright spot amid economic
turmoil.
"Argentina has granted concessions to projects for the last
10 years," said Franco Mignacco, president of Argentina's
Chamber of Mining Business. "That's why today we have this level
of lithium investment and development and the chance of growth."
Mignacco estimated that Argentina's current 40,000 tonnes of
lithium carbonate production could triple by 2024-2025 to
120,000 tonnes, which could take it past China and closer to
Chile which currently produces some 180,000 tonnes per year.
That would be driven by new projects coming online on top of
the two currently in production. The country has six lithium
projects under construction and 15 in the advanced exploration
or feasibility stage, Mignacco said.
That contrasts with Chile, where the industry is dominated
by established players SQM and Albemarle , with
few new projects underway. In Bolivia the government only
recently okayed a new project by a Chinese consortium.
Argentina's production boost would come from the expansion
of the only two producing operations - U.S. firm Livent's Fénix project in Catamarca and Australian Allkem Ltd's Salar de Olaroz mine in Jujuy - both expected to
double output to 42,500 tonnes in the years ahead.
These would be joined by the Cauchari-Olaroz project, owned
by China's Ganfeng Lithium Co and Canada's Lithium
Americas Corp , which in the second half of 2023 is set
to begin production with capacity for 40,000 tonnes of lithium
carbonate.
'PRO-MARKET STRATEGY'
Argentina, Bolivia and Chile together sit atop half of the
world's resources of the mineral under otherworldly salt flats
in the high-altitude Andean plains.
But strategies for developing it are diverging.
"Argentina's lithium sector has thrived through a
decentralized, pro-market strategy," said Benjamin Gedan,
director of the Latin America program at The Wilson Center,
adding in contrast Bolivia's lithium sector had "repeatedly
stalled as a result of excessive state control."
Chile, he said, may have found a "savvy middle ground" with
its public-private model, which would hand the state majority
control over all new lithium projects in a nationalist shift,
but would still give private enterprise a key role to play.
The wave of resource nationalism had prompted some talk
amongst officials of a potential OPEC-style lithium cartel in
the region, though analysts see it as unrealistic given the
diverse industry models and levels of development.
Argentina, meanwhile, faces challenges including economic
turmoil with high inflation and capital controls which
complicate business, while the country is headed for general
elections in October creating political uncertainty.
Its lithium pipeline, though, may keep the sector bubbling
and even gaining ground on rivals. Overtaking neighbor Chile
would be highly unlikely but some analysts were aiming high.
"Chile today produces and exports much more lithium than
Argentina," said Natacha Izquierdo, analyst at consultancy
ABCEB. "But if the projects we have here today come to fruition,
Argentina could overtake it."
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BREAKINGVIEWS-Chile’s lithium grab puts foreign miners on notice FACTBOX-World's biggest lithium producers FACTBOX-Chile lithium move latest in global resource nationalism
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(Reporting by Lucila Sigal; Additional reporting by Rodrigo
Campos; Editing by Adam Jourdan and Marguerita Choy)
Messaging: adam.jourdan.thomsonreuters.com@reuters.net))
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