Energy companies are showing excitement for lithium, often referred to as white gold, just as they showed great enthusiasm for oil in its heyday, well aware that it’s going to be part of the vehicle revolution of the future. Argentina is suddenly attracting worldwide attention for its lithium resources, needed to meet the rising global demand for battery production as the electric vehicle (EV) uptake soars.
The global demand for lithium, and other vital resources for EV production, is expected to continue increasing over the next decade, as governments halt the sale of vehicles with internal combustion engines and encourage the shift to EVs through subsidies and tax cuts. However, the price of the highly sought-after metal has increased by around 500 percent over the last year, meaning that the availability of lithium is lagging behind battery and EV production. Analysts from the Macquarie Group Ltd. are now suggesting the possibility of “a perpetual deficit.”
The huge push by governments to switch to EVs, as well as a rise in public demand, has led automakers around the world to invest heavily in the development of a plethora of EV models to suit all needs. The EV market has seen greater investment than even wind and solar power in recent years, viewed as a major contributor to the reduction of global carbon emissions.
However, the rise in lithium prices means that the metal used in EV battery production could push prices up by as much as $1,000 per vehicle. This comes at a time when car manufacturers are trying to reduce EV costs to make them more marketable. If there is not a rapid increase in lithium mining, it could significantly hinder government aims for a clean energy transition.
This month, a gathering was held in Buenos Aires for 400 mining executives and political representatives to discuss the future of Argentinian lithium. Industry majors such as Elon Musk showed interest in lithium mining for Tesla batteries. Meanwhile, Chinese and American firms entered into a bidding war, while the Anglo-Australian Rio Tinto group and China’s Zijin Mining Group Co. committed $1 billion to the Argentinian industry.
The strategic importance of Argentina is becoming apparent, as one of the few places on earth with such an abundant supply of lithium available, with an estimated 19 million metric tonnes of reserves. At present, Argentina has 13 lithium projects underway, compared to 10 in the U.S. And with rising interest in the market, several more projects are likely to follow. Michael Widmer, head of metals research at Bank of America, stated “If Argentina didn’t come through, it’d be almost impossible for the lithium market to stay well-supplied.”
Argentina’s copper mining industry could also contribute to establishing the country as a hub for resource mining and, potentially, battery manufacturing. The Bajo de la Alumbrera copper mine in the Catamarca province opened in 1997, and since it was depleted in 2018 five new copper mines have been developed. The government is now trying to foster greater investments in both lithium and copper mining as it develops its role in the global mineral industry.
Other countries, such as Chile and Australia, are currently providing much of the world’s lithium. But this is set to change as supplies run out in current mining projects, shifting attention to new lithium zones such as Argentina. The country’s lithium production is expected to overtake lithium-major Chile by 2027. And companies are quick to invest, with major steelmaker Posco Holdings Inc. providing $830 million in funding for a lithium hydroxide plant in Argentina.
Argentina, Chile, and Bolivia form the ‘lithium triangle’, holding around half of global lithium resources between them. The three South American countries are now looking to forge a relationship to increase their role in the EV supply chain as demand for their natural resources grows. At present, none of the countries have a significant stake in high-value lithium products but they are intent on profiting more greatly from their vast resources.
Argentina Mining Undersecretary Fernanda Avila stated, “the three countries have different perspectives on how to produce the lithium, but we have a shared perspective on what to do next with it… We’re working together to develop new technologies and techniques to go further in the value chain.” She also commented that Argentina hopes to eventually develop a battery manufacturing industry.
And Mexico also seems to want a piece of the action, potentially establishing Latin America as a lithium powerhouse. President Andrés Manuel López Obrador (AMLO) recently announced the nationalization of Mexico’s lithium industry – along with several other fossil fuels and renewable resources. AMLO signaled toward potential joint cooperation with Argentina, Chile, and Bolivia, to share experiences to enhance lithium mining across the countries.
With mounting international interest in Argentina’s mining sector, particularly in lithium, the South American country is demonstrating its ability to rapidly develop its mineral mining industry. However, its interest doesn’t stop there, by forging a relationship with Bolivia and Chile, as well as other Latin American powers, it could expand its role in minerals to eventually become part of the high-value supply chain.
By Felicity Bradstock for Oilprice.com
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