Feature: Argentina seeks to overtake Chile in South America lithium race

Argentina Lithium and Energy

13/11/2017 20:18

By Juliana Castilla 
    CAUCHARI OLAROZ, Argentina, Nov 13 (Reuters) - The giant 
pools of turquoise water in the mountainous deserts of northwest 
Argentina shimmer in the sunlight like oases and for lithium 
miners like Australia's Orocobre Ltd  ORE.AX , that is exactly 
what they are. 
    The mid-cap miner is one of several lithium producers 
stepping up investment in Argentina amid expectations President 
Mauricio Macri's business-friendly agenda will transform the 
country into South America's top producer of the mineral, 
ousting neighbouring Chile in five years' time.  
    Demand for lithium carbonate, which miners extract from the 
brine in these pools on the Atacama Plateau, is forecast to boom 
as production of electric cars rises. Lithium is a key 
ingredient for the vehicles' rechargable batteries, allowing 
them to retain energy far longer, and its price has soared more 
than 30 percent to a record $12,000 a tonne this year. 
    Since Macri took office in December 2015 and opened the 
country to foreign capital, Argentina has received more 
investment than any other country in the 'lithium triangle' - 
the border region including parts of Chile and Bolivia that 
contains over half the world's known reserves of so-called 
"white petroleum." 
    Orocobre, which produces some 14,500 tonnes of lithium 
carbonate per year at a mine on the Olaroz salt flat, has 
announced plans to more than double its total production to 
35,000 tonnes by 2019, in conjunction with its partner Toyota 
Tsusho Corp  8015.T   
    "There is a real potential that Argentina will leapfrog over 
Chile in terms of production in five years' time," Richard 
Seville, chief executive of Brisbane-based Orocobre, said during 
a visit to the mine. "It is going to be a very important 
player." 
    The arid conditions of the lithium triangle high in the 
Andes, some 4,000 meters (13,123 ft) above sea level, are ideal 
for evaporating the brine to leave lithium residue.   
    Argentina holds vast reserves of the white dust but for 
years, its production trailed its western neighbour as investors 
remained wary of the successive leftist governments of Nestor 
Kirchner and his wife Cristina Fernandez from 2003 to 2015. 
    Argentina is the world's third-largest producer, with some 
30,000 tonnes per year, but that is less than half of Chile's 
annual output of 70,000 tonnes. Australia, the world's largest 
lithium miner, produces 76,000 tonnes, data from the governments 
show.          
    Yet with Macri's two-year-old government making lithium a 
priority, Orocobre and other miners are bypassing Chile and 
heading for Argentina. 
    Executives at Canadian miner Lithium Americas Corp  LAC.TO , 
whose $425 million Cauchari-Olaroz development is close to 
Orocobre's mine, said Argentina's lithium output could triple in 
the next five years. 
    "The shift in mindset around looking at Argentina more 
favorably has happened very quickly over the last couple of 
years and obviously that has a lot to do with politics," said 
Chris Berry, a spokesman for Lithium Americas.  
    Argentina's energy ministry expects lithium exports to 
increase to $800 million in the coming years from $191 million 
in 2016.  
     
    'ARGENTINA'S MOMENT' 
    A clampdown by governments on greenhouse gas emissions that 
are contributing to climate change is fuelling a boom in the 
lithium market as car manufacturers start to ramp up electric 
vehicle production.  
    Lithium Americas is basing its investments on expectations 
that global production will triple to 600,000 tonnes by 2025, up 
from 200,000 tonnes currently. 
    To attract investment to the sector, Macri's market-friendly 
government has eliminated an export tax on mineral products and 
ended a ban on companies sending profits earned in Argentina 
back to their overseas headquarters. 
    That has come as a headline-grabbing conflict over royalties 
in Chile has given investors pause about projects on the other 
side of the Andes.  
    State development agency Corfo has claimed Chilean mining 
company SQM  SQMa.SN  has not complied with the terms of its 
concession contract for the Salar de Atacama, a deposit of 
lithium and other minerals that generates nearly half its 
revenue.      
    "This is Argentina's moment. This is the time," Lithium 
Americas President John Kanellitsas said. 
    At least five projects aim to add some 45,500 tonnes of 
production annually by 2019 and possibly more than 200,000 
tonnes beyond that. urn:newsml:reuters.com:*:nL1N1NJ1GR 
    Lithium Americas is partnering with SQM to build a plant in 
Argentina's northwestern Jujuy province to produce some 25,000 
tonnes of lithium carbonate, which could eventually be expanded 
to 50,000 tonnes. Production is expected to begin in 2019.  
    Other projects underway include Galaxy Resources Ltd's 
 GXY.AX  plans to produce 25,000 tonnes at Sal de Vida.  
    France's Eramet SA  ERMT.PA , meanwhile, plans to produce 
20,000 tonnes at the Centenario-Ratones salt flat, while a joint 
venture between Canada's Enirgi Group Corporation and 
Australia's Admiralty Resources  ADY.AX  aims to produce 50,000 
tonnes.  
    U.S. chemical company FMC Corp  FMC.N  joined the list last 
week when it announced plans to invest $300 million to increase 
its annual lithium carbonate production to 40,000 tonnes at its 
Hombre Muerto deposit in Catamarca province. 
    "We expect that with these new projects, and there are more 
coming, we will be in conditions to offer half of the world's 
lithium production," Macri told Reuters in New York last week. 
 
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Argentina's lithium mining projects     urn:newsml:reuters.com:*:nL1N1NJ1GR] 
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 (Additional reporting by Christian Plumb in New York; Writing 
by Luc Cohen; Editing by Daniel Flynn and Marguerita Choy) 
 ((luc.cohen@thomsonreuters.com; +54 11 4318 0645; Reuters 
Messaging: luc.cohen.thomsonreuters@reuters.net)) 
 
Keywords: ARGENTINA MINING/LITHIUM