Speaking to Fastmarkets in London in February 2022,
Argentinian government officials explained how the government
is doubling-down on lithium as a pillar of the
country’s growing mining sector. Supported by
business-friendly initiatives to attract capital and a
developing common framework for prospective developers,
Argentina aims to strengthen its lithium output and processing
capacity in the coming years.
"President Alberto Fernández and provincial
governments are clear about their commitment to speeding-up
development of the country’s lithium resource.
Argentina aims to be a mining country," mining secretary Maria
Fernanda Avila told Fastmarkets.
Argentina is situated in the so-called "lithium
triangle," alongside Bolivia and Chile, with more than 70% of
the world’s lithium reserves beneath its salt
flats. The northern Argentine provinces of Salta, Catamarca and
Jujuy are where lithium operations from incumbent and new
developers are concentrated.
Argentina’s move toward lithium miners
follows a bullish outlook for the material, with
electrification and decarbonization expected to generate
long-term demand. Fundamentals are expected to remain firmly
bullish in the coming years. Fastmarkets analysts are
forecasting a global supply deficit of 89,000 tonnes of lithium
carbonate equivalent (LCE) in 2023.
Fastmarkets assessed the price of lithium hydroxide,
monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot, cif
China, Japan & Korea, at $52.50-55.00 per kg on February
16, up by almost 500% compared with a year earlier.
Important economic pillar
"Mining will be an important pillar of the Argentine
economic future," Flavia Royón, secretary of mining for
the Argentine province of Salta, told Fastmarkets.
"Argentina hasn’t [always] had a strong
mining tradition, but because of laws that were set up already
in the 1990s, an advantageous framework was developed and
we’re seeing that today," she added. "Eighty
percent of [the country’s mining potential] is
undeveloped and unexplored."
While mining currently accounts for 0.6% of
Argentina’s gross domestic product, it has
potential to grow to around 3%, according to government
estimates. The country currently accounts for around 16% of
global lithium output, Fastmarkets battery material research
Two active producers with operations in the country,
Livent and Allchem, are soon to be joined by an array of
developing projects that are expected to come online over the
next two or three years.
Canada-based developer Lithium Americas is planning to
start operations at its Cauchari Olaroz brine site in Jujuy
later this year, where it targets a commercial output of 20,000
tonnes per year of lithium carbonate. In January, the company
concluded the acquisition of Millennial Lithium, which owns the
Pastos Grandes brine project in nearby Salta.
Last December, Rio Tinto agreed to acquire the
underdeveloped Rincon brine lithium project in
Investment is flowing in not only for the exploitation
of mining tenements, but also aimed at downstream processing
Chinese mining firm Zijin earmarked $380 million to
set up a lithium carbonate plant in Catamarca by 2023,
targeting a 20,000 tpy capacity.
South Korea’s Posco has also announced
plans to invest $4 billion on a lithium processing plant in
Salta with a capacity for 25,000 tpy of lithium hydroxide, due
for completion in 2024. Executives from Posco met with
President Fernández on March 21, with the company
beginning construction operations to set up a lithium hydroxide
plant in the north of the South American country.
Eramet and Tsingshan are also working to restart a
mothballed lithium plant in Salta.
The number of deals under way and the growing global
appetite for the mineral have fuelled optimism. "In my opinion,
in five to seven years, northern Argentina could account for up
to 300,000 tpy of lithium output," Royón
Rights ownership structure
One of the key differences from its neighbors is that
Argentina’s federalist structure gives provinces
original ownership of mineral rights, which they can exploit
according to their own constitutions. The provinces in
Argentina are "the owners of the mineral resources, rather than
the central government," Avila said.
This legislative framework is singled out by the
officials as a buffer against resource nationalism, whereby
authorities enact policies to restrict private
companies’ access to mining resources.
Other lithium-rich Latin American countries, such as
Bolivia, have so far operated under a strictly restricted
framework. In Mexico, President López Obrador announced
his intention to nationalize lithium and create a state body to
control the exploitation of reserves.
"Here, each province sets the legal framework. We are
not going to change our legislation," Avila said, highlighting
that the provinces in Argentina have ultimate say over how
their resources are handled.
Argentina’s federal structure is also
more attractive to investors, the officials claimed, compared
with countries where lithium exploitation is fully controlled
by the state, which can lead to bottlenecks in permitting and a
longer process for new projects to take off.
In neighboring Chile, all new lithium projects require
approval through the Chilean Economic Development Agency state
body. "The Chilean model has its limits," according to Alfredo
Fierro, director of trade and investment at the British Embassy
in Buenos Aires.
The Fastmarkets research team is currently following
six junior projects of interest in Argentina, but only one in
Chile. The latter did recently offer five new quotas for
exploration, so there might be developments there in the
future, although Argentina has to date shown a more active
setup for developers.
In a bid to streamline existing and prospective
developments, the nation’s three lithium-rich
provincial governments of Jujuy, Catamarca and Salta set up the
so-called Mesa Nacional del Litio late in 2021 – a
table of cooperation to agree a common way forward.
"The goal is for the three provinces to jointly set
out regulations for mineral exploitation and industrialization
[of lithium deposits] within a sustainable, environmental and
federal perspective," Avila told Fastmarkets.
ESG opportunities, risks
In addition to financial incentives, Argentina is
hoping that it can help producers meet environmental, social
and governance (ESG) credentials by producing lithium in the
With original equipment manufacturers (OEMs)
increasing scrutiny of their supply chains, following stricter
ESG parameters, localization of supply is set to continue to be
an important topic for corporations. Large automotive producing
countries such as the United States are also looking to tap
into their own reserves to ensure closer-to-home, traceable raw
On a carbon emissions basis, the country hopes that
its portfolio of renewable energy can attract producers looking
to showcase lower carbon footprints.
Prospective producers might be able to tap into what
Royón called the "best zone for solar energy" and
highlighted the La Puna and Altiplano solar park on the border
of Salta and Jujuy, which has capacity for more than
Lithium producers may also invest in renewable energy
plants to power their facilities. The government used the
example of China’s Ganfeng, which is going to
invest in a 120MW photovoltaic system to generate electricity
for a lithium extraction plant in Salta’s Salar de
There are other projects similar to this, and the
mutual interest from both renewable energy companies and miners
to develop further projects in the off-grid mining sector can
play in Argentina’s favor as the
country’s wind and solar infrastructure
Argentina’s mining representatives said
there is room for producers to highlight the social aspect of
ESG through cooperation with the provincial governments.
Prospective producers will sit at a "social table" consisting
of the producers and local community stakeholders, to discuss
the effects of developments.
The projects will be intrinsic to bringing benefits
from jobs in the community (a certain share of the workforce or
suppliers must be sourced locally, according to provincial
laws) to investments in public services. "All society takes the
risk, and all society reaps the benefits," Royón
But there are also inherent environmental risks to the
exploitation of local resources. In neighboring Chile, concerns
revolve around the use of water and potential availability
According to the World Bank, Argentina has "water
security gaps" in certain areas. With roughly 500,000 gallons
of water needed for the production of one tonne of lithium, the
scale of the new projects has created opposition among
There have been some protests in Catamarca and Jujuy,
which led to exploration stoppages in some cases.
Environmentalists and local communities demand that, before
projects progress, priority is given to determine what effect
they would have on water availability.
The provincial secretary said that water resources are
there, and new basins are in development, adding that the
government is producing an industry-focused hydric stress study
"This will tell us what the hydric stress of mining
across the country is," Royón said. "We have to ensure
there is constant monitoring of the resources to understand
what the availability and consumption are."
Argentina’s macroeconomic situation has
been a source of concern to foreign lenders and investors. The
Argentine economy has faced numerous economic challenges in
recent years, including an unsustainable build-up of debt,
rapid depreciation of its currency, steep economic contraction
and a level of inflation that hit 50% in 2021.
On January 28, Argentina struck an agreement with the
International Monetary Fund over a new set of measures and
deadlines to restructure its $44.5 billion debt. But this time,
unlike in the past, austerity is not a condition imposed by
lenders. The deal would allow for spending increases on
infrastructure and on science and technology, where mining
plays a key role.
"It’s far from ideal, but it was the best
agreement possible," Nicolas Carlos Abad, second secretary at
the UK embassy of Argentina, said. "It shows our commitment to
repay the debt. [With this deal] we have shown that Argentina
is not going to default."