Customer Logins

Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.

Customer Logins

Argentina’s lithium rush heats up as demand expectations, prices soar

11 January 2022 Keiron Greenhalgh

Argentina became the hot destination for investment in lithium, and the battery metals sector in general, in recent weeks, with more deals expected in 2022, analysts say.

Mining giants and steel companies led the charge into Argentina as 2021 came to a close, and more miners, large and small, are likely to follow them, but so too are battery producers seeking supplies, according to analysts.

The appetite will come from two areas, said IHS Markit Director Stefan Schlag Leon Beraud, mining companies that don't want to miss out on the upturn in the price and the sector's fortunes, and battery producers that want to secure lithium supplies.

In addition, Argentina offers the lowest risks of any of the three members of the "Lithium Triangle," veteran lithium executive Robert Mintak told Net-Zero Business Daily. The other two members of the triangle are Chile and Bolivia, Standard Lithium CEO Mintak, said.

The underlying thirst for lithium is the coming jump in demand for both electric vehicles (EVs) and battery storage systems, while at the same time prices for both lithium-ion batteries and lithium itself have recovered after previously slumping due to demand exceeding supply.

The International Energy Agency (IEA) said in April that, based on current trends and policies, it expects the number of electric cars, vans, heavy trucks, and buses on the road globally to reach 145 million by 2030. But the worldwide fleet could reach 230 million by 2030 if governments accelerate efforts to reach international climate and energy goals, it added. The IEA said the figure for the end of 2020 topped 11 million for the first time.

Lithium-ion battery prices increased by 10-20% in the later months of 2021. Also, prices for lithium carbonate—the lithium compound used in EVs' lithium iron phosphate batteries—rose nearly 400% between the fourth quarter of 2020 and fourth quarter of 2021, according to IHS Markit research.

Also, grid-connected energy storage installations will surpass 20 GW in 2024 and 30 GW in 2030, compared with less than 5 GW in 2020, according to IHS Markit estimates.

Splashing the cash

The dealmaking splurge of recent weeks was headlined by Rio Tinto laying out more than $800 million as it chases what the mining giant forecasts will be battery-grade lithium carbonate growth of 25-35% per year over the next decade, which the company expects to create a "significant supply demand deficit" in the second half of the decade.

Rio Tinto on 21 December agreed to acquire the Rincon project in Argentina from Rincon Mining for $825 million. Rio Tinto said the acquisition demonstrates a commitment to building its battery materials business and strengthening its portfolio for the global energy transition.

Rincon is an undeveloped lithium brine project in Salta Province, which Rio Tinto tabbed as "an emerging hub for greenfield projects." It has the potential for one of the lowest carbon footprints in the industry, the company said. Rio Tinto CEO Jakob Stausholm said: "This acquisition is strongly aligned with our strategy to prioritize growth capital in commodities that support decarbonization."

Rio Tinto has been burnishing its green credentials in recent months. In October, the company said it plans to reduce its Scope 1 and 2 carbon emissions by 50% by 2030, more than tripling its previous target, adding that a 15% reduction is achievable for 2025, five years earlier than previously planned.

Scope 1 emissions are direct emissions from sources controlled by an organization. Scope 2 emissions are indirect emissions associated with the purchase of power, steam, heat, or cooling. Rio Tinto hopes to reach net-zero scopes 1 and 2 emissions by 2050. The world's largest iron miner by volume, Rio Tinto plans to spend $7.5 billion between 2022 and 2030 on decarbonization efforts, it said.

Almost matching Rio Tinto's ability to flash the cash in Argentina a couple of days earlier was South Korean steelmaker POSCO. The company committed to plans to build a lithium hydroxide plant at the Salar del Hombre Muerto salt lake in Argentina for 950 billion South Korean won (nearly $793 million). Construction is expected to start in the first half of 2022 and finish in the first half of 2024. Lithium hydroxide is a chemically converted lithium carbonate compound.

POSCO's plant will have a capacity of 25,000 metric tons (mt) a year, and that output could be doubled. The company said demand for lithium hydroxide is increasing because it is more advantageous for improving the mileage of EV batteries compared with lithium carbonate. A year's worth of the plant's initial lithium hydroxide production capacity can be utilized by around 600,000 EVs, POSCO said.

This isn't POSCO's first foray into Argentina. In 2018, the company spent $280 million on buying Galaxy Resources' mining rights in Argentina. POSCO expects to be producing 220,000 mt of lithium from all its projects by 2030.

Lithium hydroxide decomposes at a lower temperature than lithium carbonate, allowing the process of producing battery cathodes to be more sustainable and the product to be longer lasting, according to raw materials group Bisley International.

The last couple of weeks also saw Lithium Americas' fight to acquire Millennial Lithium conclude after a complex battle with Chinese battery giant CATL and its domestic rival Ganfeng Lithium. Lithium Americas' $400 million bid beat out an offer from CATL, which itself was accepted after Millenial reached a deal to be acquired by Ganfeng Lithium in July. The CATL offer was higher, resulting in the termination of the transaction with Ganfeng.

On 5 January, some 98% of Millennial shareholders approved the company's acquisition by Lithium Americas. That followed Vancouver, Canada-based Lithium Americas inking a binding deal on 17 November after Millennial terminated its CATL deal. Millennial spurned CATL's advances for a deal premium of about 22.1%, the companies said.

The suitors were chasing the Pastos Grandes deposit, which Lithium Americas CEO Jonathan Evans said 1 November is an "attractive regional growth opportunity" near the company's existing Caucharí-Olaroz project, which he previously called the biggest yet in the Americas.

The prize

Argentina accounted for 19.3 million mt of the world's 86 million mt of identified lithium resources at the end of 2020, or around 22.4%, lagging only Bolivia in the global rankings table, according the US Geological Survey (USGS).

Global lithium production decreased 5% year on year to 86,000 mt in 2020 due to an oversupplied market leading to falling prices, the USGS noted. Batteries accounted for 71% of demand in 2020, it added. The agency's figures for 2021 will not be released until later this month, a source told Net-Zero Business Daily.

Argentina is attractive to producers because of the diversity of resources, said Schlag Leon Beraud. It has the greatest number of salt lake options in the Lithium Triangle, while Chile only has one big one, the Atacama region. Argentina and Chile are the lowest price brine resources in the world at the moment, he added.

Argentina, especially the north of the country, holds political advantages, said Schlag Leon Beraud. Salta, Jujuy, and Catamarca provinces are poorer and less developed than some of their more southerly counterparts like Chubut, but are still in a strong position in terms of their framework.

Argentina has not designated lithium as a strategic resource, unlike Chile, said IHS Markit Principal Research Analyst Lukasz Bednarski, and individual provinces can offer developers a path to securing a resource and winning permits. Paradoxically, he added, Argentina doesn't have the storied history of mining to match Chile's, but that might offer lithium development an advantage, because it means negative experiences are less common.

Argentina only has two operational lithium projects at present: Livent's Fenix facility in Catamarca province and Orocobre's Salar de Olaroz site in Jujuy province. French mining company Eramet on 17 November said it had begun construction of a production plant. The plant will have annual production capacity of 24,000 mt and enter operations in 2024. The start date has been a long time coming. The company began work on the project in 2010 and halted work a couple of times, including due to the COVID pandemic.

Lithium projects in the three northwestern provinces of Argentina are likely to ship their output through Chile, most likely the port of Antofagasta, said Bednarski. Those three provinces are the heart of Argentina's lithium push, part of the country's Strategic Plan for Mining Development.

Lithium Triangle

Meanwhile, its neighbors and fellow members of the Lithium Triangle face greater hurdles in the development of resources.

Bolivia's resources may be the greatest, but they also present harder technical challenges, said Schlag Leon Beraud, as the brine there also contains magnesium, which is difficult to separate from the targeted lithium.

In addition, while the threat of nationalization of resources as was seen under former President Evo Morales is expected to be lower under President Luis Arce, who was elected in 2020, analysts say state oversight is expected to be tighter and local protests over a greater share of royalties more likely.

In November, Bolivia signed contracts with eight international companies for pilot tests of direct lithium-extraction technology. However, past experience hangs heavy over the prospects for developments in Bolivia. In 2019, the Morales administration withdrew from a $1.3-billion lithium development joint venture agreement with German company ACI Systems.

Chile is undertaking an unprecedented rewriting of its constitution, a process that is expected to lead to higher royalty requirements for mining companies and greater local involvement in projects, say analysts.

In the capital Santiago, protesters set up barricades to call for the rejection of government bids for lithium contracts earlier in January, and Minister of Mining Juan Carlos Jobet has pledged to evaluate concerns among president-elect Gabriel Boric's staff about the tender.

Posted 11 January 2022 by Keiron Greenhalgh, Senior Editor


Follow Us

Jun 01

RT @SPGlobal: June marks the start of Pride Month, where we commemorate and celebrate the LGBTQ+ community in countries across the globe. S…

{"items" : [ {"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"","enabled":true},{"name":"twitter","url":"","enabled":true},{"name":"linkedin","url":"","enabled":true},{"name":"email","url":"?subject=Argentina’s lithium rush heats up as demand expectations, prices soar | IHS Markit &","enabled":true},{"name":"whatsapp","url":"","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"} ]}
Filter Sort