Argentina anticipates boom in lithium investment

By Myles McCormick
Published: Friday, 18 March 2016

Foreign companies vie for stakes in industry;French push Eramet involvement.

Argentina expects investment in its lithium industry to increase significantly over the next few years, after companies from across the world approached the country’s government to register their interest in entering the sector.

Businesses from Japan, France, South Korea, China and Australia are set to compete in what has become popularly described as "la guerra del litio", or "lithium war", after sharp growth in demand for lithium in battery applications gained worldwide attention. 

The Argentinean provinces of Salta, Jujuy and Catamarca have all been earmarked for tenders to conduct lithium exploration by international companies, according to local daily newspaper, La Nacion.

Argentina’s newly-elected centre-right president, Mauricio Macri, who took office last December following a tightly-contested election, has revived investor optimism in the Argentinian economy, which had been flagging as a result of political infighting and fiscal and legislative instability.

"This battle [between foreign investors] grew with the arrival of the new government for two visible reasons: Mauricio Macri’s gestures aimed at giving greater openness to the world in trade and the elimination of taxes on the mining industry," La Nacion reported.

In February, Kwon Oh-joon, chairman of South Korean battery manufacturer, POSCO, met with President Macri, following an announcement that the company would build a 2,500 tpa lithium plant at Pozuelos Lake in Salta province by the end of the year.

"We see a very good predisposition of the Macri government and huge interest in Argentina from South Korean companies," said the South Korean ambassador to Argentina, Choo Jong-youn.

Separately, Australian and Japanese representatives from ASX-listed Orocobre Ltd and Tokyo-based Toyota Tsusho Corp., which are in the process of ramping up production of a joint venture (JV) lithium carbonate operation at Olaroz in Jujuy province, also met with the president.

La Nacion noted that joining a delegation led by French president Francois Hollande, who was in Argentina for meetings with Macri in February, were representatives of French mining group, Eramet SA. 

The company plans to invest around $260m in a lithium deposit at the Centenario-Ratones salar in Salta, in conjunction with local partner, Remsa de Salta.

A group of Jujuy-based entrepreneurs, meanwhile, recently met with the Chinese ambassador, Yang Wanming, to discuss the possibility of a possible Argentinian-Chinese JV.

US-based FMC Corp., one of the world’s largest lithium producers, currently extracts lithium from brines at the Salar de Hombre Muerto in Salta.

Notwithstanding the recent rise in lithium prices, some involved in the country’s lithium business have warned against getting carried away.

"We’re seeing a lot of activity in the market at the moment, although it’s not as much as you might expect," one local operator told IM. The source added that the election of Macri, coupled with the economics of the lithium market, which they described as being "if not in shortage, certainly very tight", nonetheless made it an attractive investment to foreign business.