Lithium production in Argentina broke another export record, and the prospects are encouraging. This is due to the expansion of capacity and the expectation of a recovery in carbonate prices.
The year 2023 would have ended with an export record for lithium in Argentina. The mineral is vital for the manufacture of batteries used in electric vehicles. Based on official data for the first ten months of the year, which showed external sales of lithium of USD 682 million in that period, a study by the Rosario Stock Exchange (BCR) projected that 2023 would close with external sales of almost USD 900 million. This represents a growth of 27% compared to the 2022 figures.
From January to October, the report states, “more than 28,000 tons of lithium carbonate were shipped as of October of 2023, a product that represents more than 80% of exports of lithium in Argentina,” The development of lithium production in Argentina has been exponential, as the country exported USD 28 million at the beginning of the century and only in 2016 did it surpass the USD 100 million barrier. In turn, the jump in export value from 2021 to 2022 was primarily influenced by the recently rising price of lithium.
Lithium production in Argentina will expand in 2024
As for the future, “With significant progress in many projects in 2023, it is expected that 2024 will begin with more production capacity and that lithium extraction in Argentina will continue to expand during the year. Towards the end of 2024, the productive capacity of Argentine lithium is expected to more than quadruple compared to the levels seen at the beginning of 2023,” the Rosario report projected.
The BCR also warned that the recent imposition of export duties for mining would impact the development of gold, silver, copper, and lithium projects in Argentina. As is observed in agribusiness, the imposition of this type of tax on productive activities affects development and production, slowing it down in many cases, the authors wrote.
The collapse of the price of lithium
On the other hand, it is worth highlighting the sharp drop that the price of a ton of lithium carbonate suffered in the last year: after bordering on USD 80,000 per ton at the end of 2022, in the spot markets, it was trading at the end of 2023 below 15,000 dollars, although it is more difficult to estimate the impact of this reduction on the value of exports, which in most cases is tied to contractual supply volumes and prices with buyers.
“The recent price declines are partly explained by the liquidation of stocks of battery cells, which has temporarily reduced the demand for lithium for their production,” explained the BCR.
According to the study, once the liquidation of stocks is over, the price outlook would become bullish again due to the cut in global supply. “China’s economic dynamics will be another key issue in the global lithium and battery markets. Any potential slowdown in the world’s leading battery market could act as a bearish factor for the global prices of lithium products,” says one passage in the report.
Still, global lithium demand is expected to increase 5-fold from 2022 to 2030, according to the IMF.
Projections for lithium production in Argentina are highly encouraging compared to other countries that supply the mineral globally. According to the consulting firm CRU Group, until 2027, lithium production is expected to grow 8% annually in Chile and 16% in Australia, while the average annual increase in Argentina aspires to be 50%.
Elon Musk is interested in lithium in Argentina
President Javier Milei assured that Elon Musk, co-founder and principal shareholder of Tesla, the world’s largest producer of electric vehicles, called him because he is interested in procuring lithium from Argentina.
In this framework, the governor of Catamarca, Raúl Jalil, one of the three river provinces of Argentina (the others are Salta and Jujuy), considered “it is very good” that Musk wants to make investments, but as long as “the rules of the game of the province and economic and social environmental control standards are followed.”
“In Catamarca, there is a lot of legal security and, together with Salta and Jujuy, it has a significant investment boom not only from foreign capital but also from Argentine capital,” Jalil asserted.
He also pointed out that the three provinces, which formed the so-called “Lithium Mesa,” are working to establish “common rules of the game and regulations” for producing and selling lithium in Argentina.
In conclusion, Argentina’s lithium industry has demonstrated remarkable growth, breaking export records in 2023 and projecting substantial expansion in production capacity for 2024. Despite facing challenges such as the imposition of export duties and a sharp decline in lithium prices, the country remains optimistic about its position in the global market. With a concerted effort among provinces to establish common regulations and environmental standards, Argentina aims to maintain its competitiveness. The interest of industry leaders like Elon Musk further underscores the significance of Argentina’s lithium resources on the global stage. As the demand for lithium continues to surge worldwide, Argentina appears poised to play a pivotal role in meeting this demand and contributing significantly to the growing electric vehicle and battery industries.