Lithium Triangle Primed for a "White Gold" Rush

The geography of the Lithium Triangle

Situated in a region of the Andes in South America's southwest, the Lithium Triangle takes the form of a series of vast salt flats with a collective area of approximately 154,000 square miles — roughly the size of the entire state of California. Lithium in this hot and arid region is found in the form of mineral-rich brine deposits deep below the earth's surface. Particularly with the emergence of techniques like direct lithium extraction, these deposits represent arguably the most promising source of lithium in the entire world.

With that said, the region is not without its challenges, geographic and otherwise. The climate and high elevation of the Triangle's salt flats provide ideal conditions for permafrost formation, which can be extremely damaging to mining infrastructure. Furthermore, lithium projects in the region that lack the proper ESG considerations have the potential to not only damage the environment but also harm surrounding communities.

It's not enough to simply stake claims and develop projects in the Lithium Triangle. They must do so strategically, with a mind for sustainability and corporate social responsibility. Fortunately, many of the most prominent mining companies in the region have already taken this to heart — with any luck, others will soon follow suit.

Significant mining projects in the Lithium Triangle

Albemarle Corporation (NYSE:ALB) currently maintains the world's largest lithium project, backed by a unique contract and supported by a long history in the region. Situated 34 miles south of the Chilean town of San Pedro de Atacama and surrounded by mountains, Salar de Atacama is also known for being one of the purest sources of lithium in the world. The annual production rate of Albemarle's project has increased from 22,000 to 84,000 MT since 2016.

SQM (NYSE:SQM) is the second largest lithium producer in the region and Albemarle's chief rival. It also maintains a project in the Salar de Atacama, and recently signed a joint sustainability agreement with Albemarle subsidiary Rockwood Lithium. SQM carries the distinction of being the second-largest lithium mining company in the world, coming in just behind Albemarle.

Chinese lithium giant Jiangxi Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460) also has several projects in the Lithium Triangle amongst its holdings. The largest of these is the Mariana lithium-potassium brine project, which uses solar evaporation as part of its extraction process. The project is situated in the western part of Argentina's Salta province.

Allkem (ASX:AKE,OTC Pink:OROCF), the result of a merger between Orocobre and Galaxy Resources, owns and operates a portfolio of potash, lithium and boron projects in Northern Argentina. It has partnered with Toyota Tsusho (TSE:8015) and the Jujuy government to develop a major greenfield lithium project at the Salar de Olaroz. Said project will have a planned annual production of 42,500 MT of lithium carbonate.

Livent (NYSE:LTHM) has been active in Argentina's Salar del Hombre Muerto region for roughly 20 years. Its lithium extraction facility has a current capacity of 20,000 MT per year, which it uses both as feedstock for its downstream lithium hydroxide production and in the production of qualified battery-grade lithium. The company recently announced plans to increase its production capacity in the region by 30,000 MT per year by 2025.

Lithium Americas (TSX:LAC) jointly owns the Cauchari project alongside Ganfeng. Cauchari is notable for being the world's largest defined lithium brine resource, with an annual production target of 40,000 MT.

Lake Resources (ASX:LKE) is another major player in the Lithium Triangle, owning five projects encompassing roughly 2,200 square kilometers directly in the heart of the Lithium Triangle.

In addition to its own Cauchari project bordering Lithium Americas', Lake Resources also maintains lithium brine holdings in Olaroz and Paso, along with a pegmatite project in Argentina's Catamarca province. The company's most promising project, however, is its flagship, the Kachi project, also situated in Catamarca. Operated alongside Lake Resources' technology partner Lilac Solutions, Kachi is expected to produce roughly 50,000 MT of battery-grade lithium carbonate per year.

What makes Kachi unique is Lilac's patented ion exchange process, which is both highly sustainable and also boasts a lithium recovery rate of roughly 80 percent — double that of traditional lithium production methods. The ion exchange extraction process also uses significantly less freshwater than the traditional evaporation pond method. Once the lithium has been extracted, the brines are reinjected back into the aquifer as opposed to being evaporated into the atmosphere. The latter method damages the water table and has caused issues with some local communities.

Lake Resources and the Bill-Gates-backed Lilac Solutions are now working together to bring the project up to full production. Lake is aiming to produce 50,000 MT per year from Kachi alone and has an aspirational corporate objective to deliver over 100,000 MT per year by 2030 using the ion exchange extraction process.

Kachi’s demonstration plant, which is currently underway, has already produced more than 15 percent of its total forecast output since it was brought online earlier this quarter and will see Lilac earn an equity stake in the project.

Takeaway

With global demand for lithium continuing to rise, it is highly likely that the Lithium Triangle will soon be the site of a new form of gold rush. We can already see the beginnings of this, as multiple global mining companies stake their claims in the region. Savvy investors would do well to pay attention to the region in the coming years, as it shows a great deal of promise.

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