The resource is and there is no doubt that the intention of the Argentine State, beyond the government of the day, is to continue promoting projects based on this mineral. In fact, only in the last three years the local production grew more than 50%.
But the international context seems intent on dyeing the demand for lithium, which especially in the last five years promised to become a star of the mining market.
The change in the policies of promotion to the development of electric vehicles -the main destination based on battery technology- that countries such as China are implementing, together with an oversupply of the product due to the intensification of extractions in Asia, Africa and Oceania , the international price has been collapsing since 2018 to this part.
In this context, the activity that is taking place in Argentina is inscribed, with a commitment to lithium that has only intensified. The question that surpasses private and governmental popes refers to what can happen with mining bets if their value continues with a downward trend.
In the sector they trust that a real takeoff of the production of electric vehicles will consolidate a still hesitant demand. The fear is that this does not happen or, even worse, that the world turns to other alternative technologies to the combustion of refined hydrocarbons.
"We can not know when or how we can affect what is happening in the world with lithium We are aware that there are aspects that can impact strongly and that go beyond having or not very good reserves," assures iProUP Gustavo Koch, Director of the Argentine Chamber of Mining Entrepreneurs (CAEM).
In his vision, "technologies advance and can render the material obsolete". It would be a shame for this to happen since, as the expert states, "it is proven that Argentina has the potential to become the world's leading producer."
Koch recognizes that the greater or lesser demand is tied to the will of China and that the changes in the production and industrialization policies that the country is applying will sow a mantle of uncertainty about the price and destination of the mineral.
"Half of the lithium battery factories for automobiles is concentrating on the Asian giant, the industrial leader, the role of this nation at a global level is undisputed, as is its influence on Argentina, since it buys 40% of what it produces and it is far the biggest client, "explains Koch.
"The development of lithium as a product is strongly linked to the car battery business, if China takes any decision that negatively affects the demand for the mineral, without doubt that the situation for the sector will be complicated," the expert predicts.
Have any links in the local mining chain already taken note of this type of risk and the global fluctuation? Around organizations such as the Argentine Geological Mining Service (SEGEMAR), sources consulted by iProUP admit that, although the work in general persists, "companies now take precautions and drill more slowly".
"The exploration does not stop but the next step is done with more precautions, the projects in evaluation continue but then we must see if those areas are economically profitable for a farm," they added.
From the entity point out that "compared to Chile and Bolivia, Argentina today has a greater amount of resources." However, companies will be the ones to evaluate how far to push the accelerator in terms of increasing the rate of drilling to expand the offer.
Lithium is
In the sector there are no doubts about the commercial opportunities and the huge profits that this resource can generate. However, for the State the slice is still small, since the companies only pay 3% of royalties fixed by law.
Put in numbers: according to data from the Ministry of Production to which iProUP agreed, the exploratory budget for lithium projects and operations in the country grew almost 1,000% in four years, while the number of companies linked to exploratory projects went from 7 to 24 in three years.
The exploitation works are concentrated in the Puna, distributed in salt flats located in Salta, Jujuy and Catamarca. At present, two projects generate specific production: Olaroz, in Jujuy (at a rate of 17,500 tons), and Salar del Hombre Muerto, in Catamarca (22,000 tons).
The first is under the control of a company made up of the Australian mining company Orocobre and the Toyota automaker, while the initiative in Catamarca territory is owned by the US company FMC.
Between both, the extraction represents 16% of the world production and contribute to that Argentina occupies the third place in the ranking of producing countries of the world.
"While there are projects that are continuing and in some cases the pace has slowed down, that does not mean that the country has a leadership in terms of the greatest amount of resources evaluated," remarks a voice questioned by SEGEMAR.
From CAEM, Koch argues that the takeoff will be accentuated over the next five years. Energy Group and the Chinese Jiangxi Ganfeng Lithium (GFL) are some of the companies that aim to take control over the mineral in the province of Jujuy.
"It still remains to be seen how many of the exploration projects derive in the opening of a mine, but the truth is that by 2021 we will have more deposits operating," the manager anticipates.
Along with these initiatives, Koch argues that explorations are currently being carried out in four additional zones in the province of Salta and one in Catamarca. "In these cases, it is expected to begin with the exploitation by the year 2022," he told iProUP.
In dialogue with this medium, Facundo Huidobro, head of the Mining Chamber of Salta, agrees with the good outlook of the companies positioned in the salt flats of that district.
"At one point there was talk of fever, especially exploratory.That partly calmed down to give way to the concrete development of projects.We are now at the stage where companies confirm the importance and measure the undertakings on which they are positioned", affirms in dialogue with iProUP.
"We have Chinese, Korean, Canadian capitals, evaluations are being carried out on the properties acquired in these years, and we are confident that the demand will be growing, for the time being, orders for contractor services continue to be strong," he says.
The other side of this exploitation is in the environmental impact that the extraction of the mineral generates on the salt flats. The production of lithium consumes a huge amount of water, a resource that clearly does not abound in the Puna.
In February of this year, a block made up of 25 communities of the Kolla ethnic group in Jujuy managed to dismantle the attempt of two companies to establish farms on native lands.
Along with the negative effect on water sources, there is also unrest among the communities because, with the exception of certain initial tasks, the bulk of foreign companies involved in the mineral business in the north of the country do not hire labor. local.
Outside turbulence
Regarding the price, the lithium market is going through one of its worst moments since the ore gained commercial relevance: so far this year, its value fell by almost 10%.
And the outlook is the least worrying: according to Morgan Stanley, the price for the production of companies such as Chile's SQM - the second largest producer worldwide - will fall by at least 14% this year.
JPMorgan and ScotiaBank, with forecasts of losses of 7.1% and 4.8%, also have a negative reading on what is coming. In coincidence, from the influential Morgan Stanley, they say: "Currently, the tonne is around US $ 12,000, and we believe that this figure will fall to US $ 8,000 in the medium term".
In line with this, the consultancy Benchmark Mineral Intelligence, also anticipates difficulties for those who bet on the extraction of the material and suggest that in the short term, due to the uncertainty generated by China, it is not convenient to bet on the mineral.
In international markets there are coincidences in which, contrary to what was expected until less than three years ago, the expansion of electric cars will be less than projected. For now, that market represents only 2% of the total market sold globally.
In this framework, international analysts argue that demand should grow at least 30% to maintain the pace of investment in extraction.
What do you think in Morgan Stanley about this last? "We continue to think that the demand will be less than 700,000 tons in 2025." On the other hand, around the SQM trasandina their technical teams foresee a worldwide requirement of the order of a million.
