High Voltage: Argentina, Brazil lithium stocks vital to hitting electric vehicle targets, experts say
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
Lithium and copper production from Latin American countries like Brazil, Chile and Argentina over the next decade will decide the trajectory of the global energy transition, experts say.
With the increased shift to electric vehicles, it is projected that lithium demand from North America will face a 12.5% deficit alone by the end of this decade, says Tom Moerenhout, research scholar at Colombia University’s Center on Global Energy Policy.
A 15%-20% copper supply deficit is also expected by 2030.
“These are huge numbers,” Moerenhout says.
Building new mines, however, takes at least 10 years.
The average for critical mineral mines in recent decades stands at a dire 16 years, Moerenhout says, attributing the data to the International Energy Agency.
“Even if your market responds, and it will, the response will be slow,” he said.
Places like Chile and Bolivia have some of the world’s richest deposits of lithium and copper, but faces social, political, environmental, and financial challenges to increase production to what is required.
Impoverished Bolivia, for example, has 21Mt of lithium — more than any other country in the world — but produced less than 1% of global supply in 2021.
Chile, meanwhile, produces a lot more from its 36% of global lithium reserves and 23% of global copper reserves.
Its issue is political: under the National Lithium Strategy, which President Gabriel Boric launched in late April, the country aims to take a controlling stake in the operations on the Salar de Atacama, estimated to contain 40% of the world’s lithium reserves.
Former minister of energy and mining for Chile Juan Carlos Jobet does not agree with the approach, says Platts.
“They are saying that all lithium production, I mean projects or companies, should be controlled by the state, and I am sceptical about state-owned enterprises playing a key role in the development of the industry,” he says.
“…We don’t have a very good track record of state-owned companies developing projects in an efficient way.”
The second issue is the risk this creates for private investment in Chilean exploration.
“The risk-return equation they are offering to private investors is not very attractive,” Jobet says.
“”…The essence of exploration in mining is that I take a big risk, because if I am successful, I have the right to produce.
“If I take the risk of exploration, but if I’m successful I might not get the right to produce, then that’s a problem.”
For now, this means more investment inflow into quality explorers and project developers in mining friendly countries like Brazil and Argentina.
Argentina’s portion of the South American lithium triangle includes the brine-rich Salta province where a string of ASX-listed juniors are also exploring and developing projects, including Lithium Energy (ASX:LEL), Argosy Minerals (ASX:AGY), Galan Lithium (ASX:GLN), Lake Resources (ASX:LKE), Pursuit Minerals (ASX:PUR) and Patagonia Lithium (ASX:PL3).
Brazil loves hard rock. Its posterchild is Canada-listed Sigma Lithium (TSX.V: SGML) and its brand new 270,000tpa Grota do Cirilo operation.
That’s just Phase 1. Phase 2 & 3 of the project are expected to increase production to 766,000 tonnes annually of concentrate in a state-of-the-art lithium plant that uses 100% renewable energy, 100% recycled water and 100% dry-stacked tailings.
Nipping at its heels are a bunch of Aussie stocks led by Latin Resources (ASX:LRS), which is currently drilling to expand the size of its 13.3Mt @ 1.2% Li2O inventory at the Salinas project in Minas Gerais.
Then there’s the early-stage guys.
Solis Minerals (ASX:SLM) (TSX.V: SLMN) has spiked on volume since announcing the purchase of the Jaguar lithium project in Brazil last week.
At Jaguar – located in Bahia state — the company says there are rock chips grading up to 4.95% Li2O along a 1km long, 50m wide spodumene-rich pegmatite body.
Drilling will kick off this month.
Fellow Brazilian lithium play Oceana Lithium (ASX:OCN) has already started a 3,000m scout drilling program to test for near-surface lithium at the 124sqkm Solonópole project.
Drilling will start at the Bom Jesus de Baixo pegmatite before moving to other peggie outcrops, the company says.
(We know. These are not all the ASX lithium stocks in Latin America, and we didn’t even talk about copper. This is just a sample.)
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