Why Argentina cutting red tape could be the start of a lithium mining boom

For all the criticisms levelled against Argentine President Javier Milei’s policies, most analysts agree that his pro-business and pro-foreign investment reforms are changing global perceptions towards the South American nation.

During his campaign, he promised to free Argentines from the “oppression” of the state and presented sweeping reforms including steps to facilitate exports, end price controls and privatise companies in a bid to kick-start the process of economic de-regulation.

The package of reforms and deregulation measures, which include more than 200 articles and an accompanying fiscal package, were enacted this week after months of debate and violent protests.

But as highlighted by Pursuit Minerals’ (ASX:PUR) managing director and CEO Aaron Revelle in Stockhead’s Explorers Podcast with ‘Garimpeiro’ columnist Barry Fitzgerald, those measures might already be working with the country, tipped to head into its sixth recession in a decade, recording its first week without inflation in 30 years a mere six months after Milei’s inauguration.

Argentina’s mining and resources sector is amongst the beneficiaries with the provisions including customs and foreign exchange incentives to encourage investment in the country.

Mega miners surrounding PUR’s Rio Grande asset

That bodes well for the four new lithium projects set to begin full-scale operations in the weeks and months ahead and whose assets are expected to triple Argentina’s production capacity by 2027.

Near-term producer Pursuit Minerals (ASX:PUR) has Argentina lithium front of mind at its Rio Grande Sur lithium brine project, which is showing signs of early success after the first hole returned assays up to 629mg/L below the existing 251,300t resource.

Rio Grande Sur is right in the thick of things with Rio Tinto (ASX:RIO), Ganfeng Lithium, Albermarle and Arcadium surrounding its 92.33km2 land holding in the Salta province of South America’s lithium triangle.

With the lithium big guns operating in the country PUR managing director Aaron Revelle believes the country is seeing renewed investor interest in what is already a highly productive part of the world for lithium.

“Milei is trying to create a stable foreign direct investment platform, which arguably he’s doing, mainly through taming inflation,” he told Stockhead.

“When we look specifically at the lithium space, Chile has historically been the frontrunner but we’re now seeing a reversal with Argentina bringing on four major lithium projects.

“It is becoming a more favourable jurisdiction in which to operate and while we are an earlier stage company, we’ve been able to advance the project in a very short period of time given we only completed the acquisition of the project just over a year ago,” he says.

Clear pathway towards lithium production

Revelle believes PUR is in the next stage of real growth having just completed the first diamond hole in its maiden drilling program as it strives towards a resource upgrade this quarter.

“We’re also in the process of producing our first lithium carbonate from the pilot plant… not many juniors have a clear-cut pathway to production whereas us for us its very straightforward, we have a plant that’s operating,” he says.

“It was a second-hand plant that we bought from another company that had been testing brines in Argentina, so we know that the technology works at Rio Grande.

“We’ve gone through the chemical engineering of that and we’re working through the steps of adapting the results we’re getting from our drilling program and feeding that into the plant and then moving the plant to site where you’ve got a small-scale 250 tonne per annum operation,” he says.

“For us it’s not ‘can you produce’, we know we can produce but it’s about how big we can make it, which is all about putting that technical de-risking in place.

“That’s a key value differentiator for Pursuit in the long-term.”

Second drill hole underway

PUR is now in the process of drilling its second hole at the Sal RIO 02 tenement at Rio Grande, which is expected to reach between 500 to 600m in depth – significantly deeper than the existing resource – with results expected over the coming months.

The location of the second drill hole was selected by the geological onsite team following interpretation of the Transient Electromagnetic (TEM) survey results from fieldwork carried out in late 2023, which indicated the presence of a thick conductive layer considered highly prospective for lithium brine.

Revelle says the company is highly enthusiastic about the potential results to come from DDH-2 especially with regard to the potential size, scale and grade of the project.

In addition to PUR’s stage 1 drilling program, operations continue at the lithium carbonate pilot plant which remains on track to produce first lithium carbonate in the second half of 2024.

Ongoing discussions with potential offtake partners and end users are also progressing as is strong dialogue with relevant government authorities over the environmental permitting for evaporation ponds to be constructed on site.

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