Argentina has tripled its lithium production capacity in two years and is seeking a leading position in the global market

Lithium mining grows on high profit margins (Reuters)

Argentina has tripled its lithium carbonate production capacity in the last two years, according to the latest data from the Argentine Chamber of Mining Companies (CAEM). The four operational plants will be joined by a dozen projects set to begin operations in the coming months, which, along with the Large Investment Incentive Regime (RIGI), might propel the country to become one of the top three global lithium producers.

In a statement, CAEM highlighted the inauguration of the Centenario los Ratones plant in Salta, operated by Eramine South America, a joint venture between the French group Eramet and the Chinese Tsingshan.

The project boasts a production capacity of 24,000 tons of lithium carbonate equivalent (LCE), increasing the nation’s installed capacity to 136,500 tons. Construction employed 2,500 people and required a minimum investment of USD 870 million.

CAEM noted that in 2022, with only two plants in operation, local production potential was 37,500 LCE tonnes.

Argentina has tripled its capacity to produce lithium carbonate in the last two years.

“We are referring to productive potential or installed capacity, as new plants require time to reach peak production levels. In 2022, production reached 35,050 tons, exceeding 93% of its potential for that year,” they explained.

2023 saw the launch of Cauchari Olaroz, the nation’s third project and the second in Jujuy, effectively doubling previous capacity with its 40,000-ton LCE plant, backed by a USD 979 million investment. At the peak of construction, it employed over 3,300 people and currently operates with more than 2,100 employees, becoming a key driver of regional development.

Capacity further expanded with the production start-up of expansions to the two longest-running projects: Mina Fénix, inaugurated in 1997, and Salar Olaroz, launched in 2015. These expansions added 10,000 and 25,000 tonnes LCE respectively, bringing total installed capacity to 112,500 tonnes.

“Once the processes allowing plants to operate at peak capacity are complete, this will translate into higher export volumes and consequently greater foreign currency income for our country,” said CAEM.

Rosario Stock Exchange.

Argentina holds the fourth-largest reserve of lithium carbonate globally, located in Salta, Catamarca, and Jujuy, making it the second country in terms of resource possession and the fourth largest producer worldwide. Its aim is now to secure third place. Last year alone, Argentina produced around 40,000 tons of lithium, accounting for 15% of local mining exports, compared to 3.6% in 2020.

The national government and provinces are banking on the implementation of the RIGI to provide a favorable environment for industry development. While the regime, outlined in the Ley Bases and offering benefits for investments exceeding USD 200 million, was approved by Congress.

Eramet CEO Christel Bories recently stated, in relation to the announcement of a project set to produce lithium carbonate in Salta – marking the country’s fourth such facility – that the validity of the RIGI would be crucial for constructing a second plant.

“We are awaiting the permit, as well as the updated status of Argentina’s projects (Large Investment Incentive Regime – RIGI), which will enhance economic conditions for the construction of these types of plants,” Bories had remarked.

The country has already caught the attention of major global investors. This is evident in a review conducted by the Rosario Stock Exchange: “Between 2010 and 2022, Argentina attracted the most investment globally for lithium exploration. During the same period, our country received 61% of Latin American investment in lithium exploration. Fast forward to today, and in 2023 Argentina ranked third for exploration investment: USD 140 million last year alone, representing 17% of global investment, according to S&P. But not content with growth in exploration, Argentine lithium projects are progressing with their construction and start-up phases.

Argentina’s Lithium Boom: Tripled Capacity and a Global Spotlight

Argentina, already a key player in the global lithium market, is experiencing a surge in production, propelled by high profit margins and a growing demand for electric vehicle (EV) batteries. The country has tripled its lithium carbonate production capacity in the past two years, according to the Argentine Chamber of Mining Companies (CAEM).

From Four Plants to a Dozen: A Rapid Expansion

With four operational plants and a dozen projects set to begin production in the coming months, Argentina is poised to become one of the world’s top three lithium producers. This rapid expansion is fueled by substantial investments, including the Large Investment Incentive Regime (RIGI), designed to attract large-scale projects and boost the mining sector’s growth.

The inauguration of the Centenario los Ratones plant in Salta, operated by Eramine South America, a joint venture between the French group Eramet and the Chinese Tsingshan, marks a significant milestone. With a production capacity of 24,000 tons of lithium carbonate equivalent (LCE), this plant pushes Argentina’s total installed capacity to 136,500 tons.

From 37,500 Tons to 136,500 Tons: A Remarkable Leap

In 2022, Argentina’s lithium production capacity stood at 37,500 tons LCE, with only two plants operational. The addition of new plants and the expansion of existing ones have dramatically increased capacity. This growth is further evidenced by the recent launch of the Cauchari Olaroz project in Jujuy, which boasts a 40,000-ton LCE plant and an investment of USD 979 million.

The expansion of the Mina Fénix and Salar Olaroz projects, both established players in the industry, has contributed significantly to Argentina’s increased production capacity. These expansions added 10,000 and 25,000 tonnes LCE respectively, further driving the country’s dominance in the global lithium market.

Beyond Capacity: High Production and Exports

Argentina’s increased production capacity is translating into higher export volumes and significant foreign currency income for the country. While in 2022, production reached 35,050 tons, representing 93% of its potential, the country is poised to surpass this figure as new plants reach peak production levels.

Argentina’s Lithium Resources: A Global Hotspot

Holding the world’s fourth-largest lithium carbonate reserve, located primarily in the provinces of Salta, Catamarca, and Jujuy, Argentina is second only to Chile in terms of lithium reserves. The country is already among the top four lithium producers worldwide and is now aiming to climb to third place.

Argentina’s lithium production has witnessed a significant increase, from representing 3.6% of total mining exports in 2020 to 15% in 2022. This demonstrates the rapid growth of the sector and its growing contribution to the country’s economy.

The RIGI: A Catalyst for Growth

Both the national government and the provinces are actively promoting the Large Investment Incentive Regime (RIGI) as a vital instrument for the development of the lithium industry. This regime, enshrined in the Ley Bases, offers incentives for investments exceeding USD 200 million.

Eramet CEO Christel Bories has highlighted the importance of the RIGI for the construction of new plants, signaling its role in attracting further investments to the sector.

Investments Pouring In: A Global Recognition

Argentina has become a magnet for global investors. Between 2010 and 2022, Argentina received the most significant investment in lithium exploration worldwide.

In 2023 alone, Argentina attracted USD 140 million in exploration investment, representing 17% of global investment. This demonstrates the confidence of international players in Argentina’s lithium potential. Beyond exploration, Argentina’s lithium projects are actively moving towards construction and start-up phases, further solidifying the country’s position as a global lithium leader.

Argentina’s Lithium Future: A Bright Outlook

With its vast reserves, substantial investments, and supportive policies, Argentina is poised for continued growth in the lithium sector. The country’s focus on sustainable production practices, coupled with its strategic location, positions it as a key player in the global transition to a cleaner energy future.