Fully charged?

Argentina’s lithium industry is poised to overtake Chile as the new powerhouse.

Amid Latin America’s resource nationalism, Argentina’s market-led lithium production sector is experiencing an exhilarating boom. Over the past decade, Argentina has been granting exploration concessions, fuelling the growth of its lithium industry. Even the state-owned Yacimientos Petroliferos Fiscals (“YPF”) joined the lithium exploration race just last year. 

According to the Argentinean Chamber of Mining Business, the current lithium carbonate production of 40,000 tonnes could triple by 2025, reaching an impressive 120,000 tonnes. The country has also managed to attract investments totalling c. USD 4.2 billion since 2020. With these positive trends, Argentina is poised to surpass Chile and become the second-largest producer of lithium. However, as a mining entrepreneur considers, “The sector has been growing and will surely continue to do so, but we should not think that in economic terms it is going to have the same impact as oil has had on Arab countries. It will undoubtedly make its contribution to the national economy. But we need 20 contributions like lithium for the economy to be really strengthened.” 

“The sector has been growing and will surely continue to do so, but we should not think that in economic terms it is going to have the same impact as oil has had on Arab countries.”

A mining entrepreneur, Argentina

A leading Argentinian economist notes that “until the end of 2022, Argentina, with a production of just over 30,000 tonnes of lithium, was behind Australia, Chile and China, so we still have a long way to go to climb into those positions.” But looking ahead, Chile is expected to lose market share to both Argentina and Australia over the next decade. Chile’s production is heavily reliant on just two projects in the Atacama region, while Argentina boasts an impressive pipeline of 36 projects. This diversity gives Argentina a competitive edge in the lithium market.  

However, “the biggest concerns come from the political sector,” notes a prominent mining entrepreneur. Argentina’s de-centralised and pro-market strategy faces significant challenges. The country grapples with ongoing economic turmoil, including record high inflation and capital controls. Investors are also wary of the upcoming October Presidential Election, as the victory of either the Kirchnerist candidate or the far-right Javier Milei could potentially result in strong and radical leadership, creating a less favourable environment for political dialogue but entrepreneur continues, “None of the candidates with a chance of winning the presidency is going to turn against the mining sector, whether out of conviction or necessity.” 

“None of the candidates with a chance of winning the presidency is going to turn against the mining sector, whether out of conviction or necessity.”

A mining entrepreneur, Argentina

Despite some concerns, executives at multinational mining companies are also optimistic that, regardless of the election outcome, the government will continue to treat lithium extraction like any other mining operation. The current regulatory framework allows companies to retain 72% of profits, compared to 64% in Chile, according to S&P Global Market Intelligence.  

While challenges persist, the booming lithium industry in Argentina demonstrates the country’s determination to capitalise on its rich natural resources. With a favourable regulatory environment and a diverse project portfolio, Argentina is attracting international investors who believe in the long-term prospects of the country as a major player in the global lithium production landscape. 

However, the road ahead will not be smooth. The country must navigate economic uncertainties, political transitions and the need to rebuild and sustain investor confidence. By addressing these challenges head-on and maintaining a commitment to market-driven approaches, Argentina can solidify its position as a significant lithium producer and contribute to meeting the growing global demand for this valuable resource. Argentina also “needs to keep its feet on the ground,” warns a leading economist, “not to think that lithium is going to save the country, but also to be aware that there are ongoing research projects into alternative sources of energy generation or accumulation, which may at some point mean that lithium will cease to have the relevance it seems to have at the moment.” 

As Argentina’s lithium story continues to unfold, the world watches with anticipation, recognising the country’s potential to shape the future of the industry. Only time will tell if Argentina can overcome its obstacles and establish itself as a dominant force, driving innovation and powering the sustainable energy solutions of tomorrow. 

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