Buenos Aires Times

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Argentina eyes off lithium growth despite concerns

The country is seeking to become a leading exporter in a sector on the rise but environmental groups warn of dangers.

Saturday 18 August, 2018
Argentina is located in the area known as the Lithium Triangle, shared with Bolivia and Chile.
Argentina is located in the area known as the Lithium Triangle, shared with Bolivia and Chile. Foto:FILE PERFIL

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A shift towards electric cars in developed countries has dramatically increased the global demand for lithium, the mineral used to build the batteries.

The situation is opening up new opportunities for Argentina, a country which shares 70 percent of the world’s total lithium resources with Chile and Bolivia, and could become a leading exporter.

Nevertheless, experts agree that government policy has lagged behind the growth in demand. They question whether Argentina is exporting the mineral with no added value. At the same time, environmental concerns over mining techniques and their negative impact on surrounding areas are starting to pile up.

Described by some as white gold, lithium is a key resource in the manufacture of batteries in mobile phones, computers and electric vehicles, among other products. On the heels of growing demand by car makers, its price has soared in five years from US$4,000 to US$14,000 per tonne.

Argentina is estimated to have 873,000 available hectares for lithium mining, with more than 50 projects in the exploratory phase, according to the country’s Mining Secretariat.

“The resource can be easily obtained in Argentina, which has become much more attractive for foreign companies than its neighbours,” Javier Cao, energy expert at Abeceb consultancy, told the Times. “Both Bolivia and Chile consider lithium a strategic resource and that limits the role of private companies.”

Chile has limited the space allocated to lithium mining projects and Bolivia does not allow foreign investment in lithium. That has shifted companies’ focus to Argentina, especially after the Mauricio Macri administration scrapped export duties on mining and loosened regulation for foreign firms.

In Argentina, lithium is obtained from salt mines in the northern provinces of Jujuy, Catamarca and Salta. There are two large mines currently operating: Salar Olaroz in Jujuy and Salar del Hombre Muerto in Catamarca, from which that province extracts 30,000 tonnes per year, representing 15 percent of global production.

But production could soon reach 130,000 tonnes with some project sites currently under construction, such as Salar del Rincón in Salta, Caucharí in Jujuy and Mina Fénix in Catamarca. Many others are waiting at the finish-line after completing their feasibility studies.

Companies from Japan, South Korea, China, Australia, New Zealand, United States and France have expressed interest in carrying out lithium extraction projects in Argentina. If all projects in Jujuy and Catamarca move forward, the country could secure investments of up to US$700 million by 2019, according to the Mining Secretariat.

“Argentina has huge potential thanks to the growing demand and local production capacity,” Marcelo Álvarez, president of the CAEM mining industry chamber told the Times. “The country could fully supply the global demand for lithium for batteries by the end of the decade.”

Nevertheless, this will not solve Argentina’s trade deficit as lithium plays a smaller role in the national economy than other mineral exploits. A copper mine like Bajo de la Alumbrera in Catamarca can export up to US$680 million a year, the equivalent production of three lithium mines. A lithium mine could expect to export between US$100 and US$200 million per year.

A PLACE FOR ARGENTINA

The overall expansion of the lithium extraction has forced a debate among experts over the role the country should play in the sector. Experts question whether the mineral is largely exported with no added value, with authorities disregarding the possibility of manufacturing batteries in the country.

Bruno Fornillo, a researcher at Argentina’s main research body CONICET and coordinator of the book Geopolítica del litio (Lithium Geopolitics) told the Times that Argentina “lacks a national policy” surrounding the mineral and that attempts to place added value on the production have been “insufficient,” with no “long-term state policy that encapsulates all lithium players.”

“There’s no articulation between the provinces and the national government on lithium policies and that makes everything more difficult. There are only a few attempts to try to add value to the mineral, but they are not enough,” he said, referring to research centres in Jujuy and Córdoba that explore the uses of lithium.

Meanwhile, for Cao, industrialising lithium production “is not a priority for the Macri administration.” Nevertheless, he claimed manufacturing batteries in the country “would not make much sense” as the electric vehicles market in Latin America is so far underdeveloped.

The only project in the country to manufacture batteries stemmed from an agreement in 2016 between state research firm Y-TEC, Italian battery manufacturer FIB-FAAM and the Jujuy state-run firm Jemse. With a US$80 million investment, construction is scheduled to start this year.

MINING RISKS

As lithium extraction projects intensify, environmental groups have raised alarms about the negative consequences lithium mining could have, such as on consumption and pollution of waterways, impacts on surrounding areas, and in terms of biodiversity and chemicals contamination, among others.

Lithium is obtained through an evaporation process, which requires two million litres of water per tonne of mineral extracted. Part of it is salted, meaning the water is unsuitable for human consumption. By using so much of it, underground fresh water aquifers could be affected.

A lack of water would also affect local populations that rely on it for their daily activities, such as farming, forcing them off their properties. At the same time, some areas that have been approved for mining have been identified as critical for biodiversity, specifically of flamencos.

“Lithium mining is described as a green activity as it would allow for the reduction in the dependency on fossil fuels, moving towards cleaner transportation. But it’s actually not green at all,” Patricia Marconi, head of the Yuchan Foundation in Catamarca province told the Times.

“Mining dominates everything and would alter the lifestyles of many people. We need better technologies that use less water. These are areas where water is seriously scarce and lithium mining could bring many problems.”

Seeking to manage the expansion of the activity, the national government created a lithium working group, including representatives from all provinces, in order to establish standards for projects, such as asking companies for hydrological and environmental studies. Nevertheless, experts question whether they are insufficient.

“We need more studies before deciding to move ahead with a project. Provincial environmental authorities have a highly limited role,” Pía Marchegiani, head of Environmental Policy at Fundación Ambiente y Recursos Naturales (FARN) told the Times. “As the activity expands, conflicts and tensions grow.”

BY FERMIN KOOP

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