Contrary to the good omens and economic promises of the last decade, expectations regarding lithium continue to deflate in Argentina.There is no lack of voices that recognize that the so-called "white gold" by several industries experiences the bursting of a bubble that mining companies (at this point very affected by the inconsistencies of the business) cannot fail to recognize.Although lithium has a relevant presence in the extractive matrix that Alberto Fernández intends to print to his government, the truth is that a combination of factors has been subtracting all economic attractiveness to the businesses designed for the domestic scenario.According to official data accessed by iProUP, the exploration budget for lithium projects and operations in the country grew almost 1,000% in four years and the number of companies linked to projects increased from 7 to 24. However, exploitation as such did not add new deposits.And what is more negative for the official intention: the investments began to slow down or, directly, to be completely paralyzed. A resounding example is the decision of the French Eramet to suspend its 600 million dollar project scheduled for the Centenario-Ratones salar, in the province of Salta.The company had already disbursed a little more than 140 million dollars in the installation of a pilot plant, but stopped all progress. "The context in Argentina and the economic climate in the world in general does not allow us to calmly follow this project," said Christel Bories, CEO of the company.Another actor in the segment, the American Livent Corporation, conveyed its decision to "put current capacity expansion plans under review." Through those responsible, he explained that the current values for the mineral force to establish estimates of income and benefits downwards.Livent Corporation controls the Phoenix project (formerly known as FMC Lithium) in Catamarca. It is one of the only two enterprises that are in the phase of concrete exploitation in Argentina. The other is Olaroz, jointly operated by Australia's Orocobre, Japan's Toyota Tsusho and JEMSE state-owned Jujeña.The truth is that the small amount of operational deposits shows that the interest created around the mineral housed in the Puna has not passed, in general, monitoring and investment promise."There is a clear decrease in speed. There are projects under construction that slowed down strongly, to the point of being practically unemployed, since they do not know what will happen to the sector and what policies the government will apply," Julio Ríos Gómez tells iProUP, until Very little president of the Argentine Geological Mining Service (SEGEMAR)."In addition, investors are not going to put money back until they are clear on how they will agree, for example, with creditors like the IMF," he adds."Eramet left everything in 'stand by', being that he had the start of the venture ready. He stopped everything when he was about to start building. Until the Government's position in mining is known, it is most likely that he will not start the works. The same goes for the Caucharí Olaroz project controlled by the Canadians of Lithium Americas, "he adds.Ríos Gómez indicates that the lack of definitions on how Argentina will resolve its debt, coupled with aspects such as currency control and the permanent rise in costs due to inflation, combined to "numb" the strong initial interest in the metal.The exploitation works are concentrated in the Puna, distributed in salt flats located in Salta, Jujuy and Catamarca. An aspect silenced by the firm is the environmental impact that the extraction generates in salt flats that contain the mineral. Simultaneously, its production consumes a huge amount of water, a resource that does not abound in the Puna.
In economic terms, another factor that operates negatively on the expectations of mining companies is the international price.For many, that the mineral has fallen is the product of the "prick" of a bubble that would sooner or later happen: in 2018, the ton was priced at $ 16,500; These days it is very close to $ 8,000.From the Rosario Stock Exchange they provide details of this swing, the causes and consequences."The price began to increase in 2002, within the framework of the 'boom' of commodities, boosting investments that generated metal oversupply as of 2008," they say."In the period 2008-2015 - they add - it remained at values close to $ 4,300 a ton. Subsequently, the strong expansion of demand for electric vehicles boosted prices and disbursements.""However, after reaching that peak of $ 16,500 in 2018, prices gave way due to the growth of supply for Australian and Argentine production," they add.According to the projections to 2025, the offer in the next 5 years is expected to grow at a higher rate than in the past and exceed the demand increase, which will result in a price drop of the order of 34% " .This analysis coincides with another forecast by the Moody's rating agency, which expects a decrease "as a result of the increase in international production, after several years of investment in the sector."Even a sudden increase in demand (driven by the rebound in the manufacture of electric vehicles) would not be enough to absorb the supply planned for this decade. Estimates account for a ton quoting at $ 10,400 in the medium term, that is, $ 6,000 less than the 2018 record."The international context adds a strong complication to a local scenario that discourages companies. Especially foreigners, who also have no political guarantees that they will be protected in legal and economic terms," a source close to GEMERA, camera, tells iProUP which brings together mining companies exploring in Argentina."It is a hinge moment for lithium even as technology, since there is talk of possible mineral substitutes. We must see how the government reads this situation," they add.
Another aspect that affects domestic activity is the emergence of competing rivals in the competition for the provision of the mineral.In that sense, Bolivia, considered the territory with the largest brine reserves in the world, lost relevance after closing 2019 without exports.In 2018, the state-owned Bolivian Lithium Deposits (YLB) managed to market 110 tons to the United States and India. But the decrease in the price, added to the exit of the power of Evo Morales, ended up interrupting the exploitation activities in the Uyuni salt flat.Chile's SQM, today the second largest lithium producer in the world, also concluded 2019 with negative results although in terms of profits.Meanwhile, Peru wants to join the table of regional producers. Recently he activated a series of studies to know in detail the availability of the mineral in the south of that country.In February, the Canadian mining company Plateau Energy Metals confirmed the finding of reserves in the Puno area, bordering Bolivia and Brazil. The firm reported that the resource detected could lead to an operation capable of consolidating Peru as the sixth largest lithium producer in the world.Outside of the movement in South America, China and Australia appear as the countries that most subtract opportunities from miners focused on the business in albiceleste lands."China extracts it from two important salt flats and it is the nation that created the methods to exploit the chloride used in Argentina. Australia became strong through hard rock production," Ríos Gómez says."Now they say that Mexico also has very important reservations. They are actors that will make the contest harder. Argentina must redefine its policies if it aspires to have some type of prominence," he concludes.