Elon Musk is looking to Argentina to shore up more lithium supply. Pic via Getty Images. Credit: Pool.
Mining
Battery metals’ current best friend lithium is spinning around the rumour mill in Argentina lately with billionaires, top industry experts and even Presidents believing the South American nation is primed to become one of the world’s biggest, lowest-cost and highest-yield Li producers.
Argentina’s salty brines – where ponds called ‘salars’ extract lithium carbonate equivalent (LCE) – are located in South America’s ‘Lithium Triangle’, which is a border region that encompasses the nation, Bolivia and Chile.
It seems that Argentina’s new President Javier Milei has been talking to billionaire Elon Musk about his country’s critical minerals – as the South American nation is turning up its low-cost lithium brines capacity and turning on its long-dormant copper production, both of which are critical minerals used to make batteries for EVs.
Both surpassing previous year’s car production totals, Tesla built 1.8 million cars last year, while Chinese rival BYD, which sells for slightly cheaper, produced 3 million.
Looks like we’re going to need a lot more lithium. It’s a good thing it’s expected that 18 new projects will come online in Argentina alone in the coming couple of years, according to Fitch, and a handful of those are listed on the ASX.
On his way to being elected, Javier Milei touted reforms to the sector that included capital controls, a consolidation of exchange rates and a reduction of export taxes – all of which are highly attractive to foreign investment.
Since gaining power, he’s promised to cut red tape and burgeon Argentina’s lithium and copper-gold production into an “investment powerhouse”.
In his presidential decree last month, Milei said “mining is another area with great potential in the country that is notably underdeveloped,” speaking about reforms, and “to that end, we must eliminate costs”.
The nitty-gritty of it is two laws that were enacted in the 1990s: the National System for Mining Trade and the National Mining Data Bank – which require companies to provide multitudes of arguably mundane data to the government – increasing business costs and often seen as benign to outcomes.
Customs restrictions are another stickler. The previous government under Alberto Fernández sought to siphon a percentage of its lithium production for local use to develop its downstream industry – which Milei opposes in favour of foreign investment which will accelerate the industry, as he sees it, at a faster pace.
“From today on, it’s prohibited to prohibit exports,” Milei said.
With decades under his belt being all things lithium across the globe, “Mr Lithium” Joe Lowry says Argentina’s new President aims to continue the nation’s push to improve its mining and energy sectors, as written in his 2023 recap and 2024 outlook.
“In Argentina, Cauchari, (the LAAC & Ganfeng JV ‘Mineral Exar’) began the ramp up to an ultimate goal of 40,000tpa LCE. In August, I did a flyover of several other projects in the Argentina Puna,” Lowry says.
“Progress is evident and that was before the election of a new President who has stated his intentions to eliminate barriers to developing lithium projects.
“It is too early to know how successful he will be in dealing with the economic issues that have long stymied the development of lithium in Argentina but I choose to be optimistic.”
With EV sales rising 30% year-on-year between 2022 and 2023 for 14.5 million units, it’s no wonder Elon Musk and his Tesla arm have eyes on further shoring up Li concentrate from consistent lithium producers.
Musk had cast his eyes on the country and is purportedly keen on finding new, close-to-the-US sources of lithium concentrate to supply his Tesla EV batteries.
He’s already expressed positive views of Milei prior to the election:
Very interesting talk that goes far beyond Argentina in subjects discussed https://t.co/cUKZtSitfk
— Elon Musk (@elonmusk) September 17, 2023
Musk, at the start of construction of Tesla’s downstream battery production facility in Texas, said, “looking into the next few years, a fundamental bottleneck in the development of electric vehicles is the availability of battery-grade lithium.”
That’s due next year, and the facility will be able to produce batteries for 1 million EVs per annum once in full production.
Driving forward Galan Lithium’s (ASX:GLN) push into Argentina brine is managing director Juan Pablo Vargas de la Vega, who says the narrative of opex is back in the lithium sector, a conversation that was being had pre-COVID.
“Galan is part of this low-opex solution which is shown in our last two definitive feasibility studies (DFS) for our Hombre Muerto West (HMW) brines project,” JP Vargas says.
“Lithium brines have a competitive advantage for being a long-term, low-cost option of supply for OEMs.
“Grade is king and Galan has it – that’s why we continue to build Phase 1 of HMW despite a marked nose dive in the lithium price.
“To put it bluntly, if lithium brine does not get into production because of lithium prices, then there is simply no lithium supply – that means no batteries for EVs, of which sales continue to grow strongly.”
Argentina makes up 85% of the Puna de Atacama, a salt-rich desert where lithium brine-rich ponds can be constructed to feed the world’s battery needs. Here’s a few active ASX-listed explorers and developers aiming to get their lithium-brine projects off the ground.
First up is Pursuit Minerals (ASX:PUR) with its flagship 251.3kt LCE @ 351mg/Li Rio Grande Sur project consisting of four ponds in the Salta province, with recent moves including commissioning and processing LCE from its pilot plant in Q1 this year.
The pilot plant will start with 100tpa and is in the process of being upgraded to 250tpa as a litmus test for lithium extraction viability from the project, a common milestone in project development with brines.
“We’re expecting to increase our resource from recent geophysical surveys that (show) our resource will increase at depth,” PUR CEO Aaron Revelle says.
“The appointment of Milei has really decreased uncertainty and we are looking forward to mining permits being granted in the immediate term for the project.
“Argentina’s market-friendly policies and long-term lithium fundamentals bode well for Pursuit and potential offtake partners.”
Then there’s GLN’s HMW project, which is astutely separated into four production phases to stagger capex, with the initial Phase 1 DFS focused on the production of 5.4ktpa LCE by H1 2025.
The Phase 2 DFS targets 21ktpa LCE in 2026, which will be followed by Phase 3 production of 40ktpa LCE by 2028 and a final Phase 4 production target of 60ktpa LCE by 2030 that will include lithium brine sourced from both HMW and the Candelas deposit.
JP Vargas says HMW’s Phase 1 construction is tracking along as planned.
“Galan’s experienced and competent construction team are entirely focused on delivering the first HMW production phase in H1 2025 and remain enthusiastic and confident in doing so,” JP Vargas says.
GLN made big news recently after it inked a $100m prepayment finance deal with global mining major Glencore for the latter to purchase up to 100% of the proposed lithium chloride concentrate production of Phase 1 and secure first rights to negotiate financing for future Phase 2 expansion operations.
Glencore is currently undertaking due diligence of HMW before a final investment decision is made.
Next door to Allkem’s (ASX:AKE) Olaroz salar, which is currently ramping up Stage 2 production of 42,500tpa LCE, is Lithium Energy’s (ASX:LEL) 3.3Mt Solaroz project.
In an agreement with extraction specialist Lanshen, it will build a demonstration direct lithium extraction (DLE) plant capable of producing up to 3,000tpa of battery-grade lithium carbonate.
The demonstration plant is to prove future development of either a base 20,000tpa option or an upsized 40,000tpa LCE production facility.
Large-scale lab testwork is currently underway and is expected to be completed this quarter in advance of the proposed Lanshen DLE plant.
Also using DLE tech, Lake Resources (ASX:LKE) is pursuing its flagship Kachi project and three other lithium brine projects across a total 200km2 within Argentina’s lithium triangle.
It recently completed a Phase One DFS at the 10.6Mt Kachi and is targeting consistent battery-grade lithium carbonate production that can produce >99.5% purity using ion exchange DLE processes with Lilac Solutions.
LKE aims to produce 25,000tpa throughout Phase One and is targeting first lithium in 2027 from its maiden ore reserve of 624,000t LCE.
The explorer is currently negotiating with offtake partners led by Goldman Sachs and is targeting a final investment decision by Q1 2025.
While Lithium Energy Lake Resources and Galan Lithium are Stockhead advertisers, they did not sponsor this article.
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