Will Argentina be a Leading Exporter of Lithium?

Battery Metals
Lithium Investing

Argentina is currently the world’s third-largest lithium producer. Is it on its way to becoming the world’s largest exporter of the metal?

Argentina may only be the world’s third-largest lithium producer, but last year’s output of 5,700 MT is undoubtedly promising for the country’s role in the sector.
As per the most recent data from the US Geological Survey, Argentina’s lithium production rose almost 60 percent in 2016, “primarily owing to a new brine operation.” And according to Reuters, more increases could be coming — lithium carbonate output in the country is expected to at least triple in the next few years.
All in all, it seems clear that lithium has a bright future in Argentina. And with that in mind, it’s worth taking a look at whether the country could eventually become the world’s leading exporter of the metal.

Lithium Argentina: An attractive location

While Argentina may eventually become the world’s leading lithium exporter, it has a long way to go before it gets to that point. Last year, the top producer of lithium was Australia, which put out 14,300 MT, while Chile, the second-largest producer, produced 12,000 MT. As mentioned, Argentina’s output of 5,700 MT put it in third place.
But with worldwide lithium requirements set to grow significantly on the back of electric vehicle demand, many market watchers believe the country could take a larger piece of the pie moving forward.

Why? For one thing, Argentina, along with Bolivia and Chile, is part of the “lithium triangle,” which accounts for half the world’s lithium reserves. Bolivia produced no lithium last year, but as noted above, Chile’s output was significant.
For another, since becoming president of Argentina in December 2015, Mauricio Macri has taken significant strides in making the country an attractive place for miners by implementing pro-market reforms. His actions have been widely hailed as a win for the mining industry, and have left many investors and analysts feeling optimistic about Argentina.
“Without a doubt, the president’s measures have brought back competition, predictability, and clear rules of the game to the mining sector, which has resulted in a lot of interest in lithium in particular,” Reuters quotes Mario Capello, subsecretary for mining development in Argentina’s Energy and Mining Ministry, as saying.
Summing up the situation, John Kanellistas, president of Lithium Americas (TSX:LAC), said recently that “the world is focusing on Argentina,” while in January Joe Lowry, also known as “Mr. Lithium,” described Argentina as the next great “lithium province.” He expects the country to be the largest producer of brine-based lithium chemicals by 2022.

Lithium Argentina: Companies making strides

Unsurprisingly, a slew of companies have been drawn to Argentina. Some are producing lithium, while others are exploring for it.
Two noteworthy companies working in the country are Orocobre (TSX:ORL) and Advantage Lithium (TSXV:AAL), which announced a partnership in November 2016. According to a press release, Advantage has the right to earn up to a 75-percent stake in Orocobre’s Cauchari project, and can gain 100-percent interests in five other lithium brine projects belonging to Orocobre.
On February 17, Advantage closed a $20-million financing, and said it will use the proceeds to develop Cauchari, which has a large, defined exploration target, and the five other projects. Drilling is expected to begin in March 2017.
In addition to the projects it is working on with Advantage, Orocobre also holds the Salar de Olaroz lithium facility. In a recent interview with the Investing News Network, David Sidoo, president and CEO of Advantage, said of Orocobre, “watch out for Orocobre, I think they’re an up and coming in Argentina.”

Millennial Lithium (TSXV:ML) is also making waves in Argentina. The company has four brine exploration projects in the country, and is largely focused on its Pastos Grandes project. The company is hoping to be in production at an initial rate of 10,000 tonnes of lithium per year by 2020. Its goal is to become a “key player” in Argentina’s growing lithium sector.
The company reported results from the first two complete exploration wells at Pastos Grandes in January. According to the release, its lithium brine capacity is far more significant than what the company initially estimated.

Lithium Argentina: The upshot

Of course, those companies are not the only ones operating in Argentina by a long shot. FMC (NYSE:FMC) is a major company working in the country, while smaller players include Argosy Minerals (ASX:AGY), Centenera Mining (TSXV:CT),Dajin Resources (TSXV:DJI), International Lithium (TSXV:ILC), Argentina Lithium & Energy (TSXV:LIT) and Galaxy Resources (ASX:GXY).
All in all, given Argentina’s location, its pro-mining government and the sheer number of companies working there, it certainly looks possible that it could become a leading exporter of lithium in the coming years. Investors will no doubt be keeping their eyes peeled to see what happens.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Advantage Lithium, Centenera Mining, Dajin Resources, Galaxy Resources, Argentina Lithium & Energy and Millennial Lithium are clients of the Investing News Network. This article is not paid-for content.

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