Argentina Could Overtake Chile as South America’s Top Lithium Producer by 2035

Argentina could become a bigger lithium producer than Chile, mining 481,000 tons of lithium carbonate equivalent in 2035 versus 426,000 tons for Chile, GEM Mining Consulting has forecast. The shift at the top will be driven by growing demand for the battery metal.Argentina is currently the world’s fourth-largest lithium producer, after Australia, China, and Chile. It is part of the so-called Lithium Triangle, which, besides Chile, also includes Bolivia and describes a region in the Andes notable for its abundant lithium reserves. Chile has been the ultimate South American lithium king so far but just one new mine can change that in favor of Argentina, according to GEM Mining Consulting.The mine in question is the Pozuelos-Pastos Grandes project, expected to produce as much as 150,000 tons of lithium annually once it becomes operational. The project, in northern Argentina, is led by a company called Lithium Argentina, in partnership with Chinese mining major Ganfeng Lithium. Total investment in the mine is estimated at $3 billion, with development to comprise three phases. Currently, the companies are looking for a third partner in the investment, Mining.com reported earlier this year.If the Pozuelos-Pastos Grandes project does not take off, however, Argentina’s lithium production will fall in the coming years, GEM Mining Consulting also said. Unlike Argentina, however, Australia and China will continue expanding their output of the battery metal that China has utilized to cement its dominant position on the global energy transition market.It is this transition that is driving demand for lithium and new investment despite a series of price crashes in recent years as real-world demand fails to live up to forecasters’ expectations. Australia, for instance, is expected to produce 921,100 tons of lithium in 2030, rising to 966,400 tons in 2035. China, according to Gem Mining Consulting, will produce 615,700 tons in 2030, going up to 618,700 tons in 2035.Demand for lithium is widely expected to keep growing steadily in the coming decade or so amid renewed efforts to electrify as much of the global economy as possible within a short time, to reduce dependence on hydrocarbons amid the historic supply disruption caused earlier this year by the war between the United States and Israel, and Iran. However, supply of oil and gas from the Persian Gulf is now on the rebound, which would put electrification ambitions to the test, if prices continue to slide.The big drivers of lithium demand are, of course, electric vehicles and battery storage. The latter got an especially strong boost from the war. Battery storage had already become critically important for grids with large amounts of weather-dependent wind and solar generation, because output from these sources does not always coincide with electricity demand. Batteries can store excess power and release it when needed, and there is really no alternative to that.Batteries have become one of several tools available to balance electricity systems, alongside flexible generation, transmission links, demand response and other forms of energy storage. As the war highlighted the vulnerabilities inherent in energy commodity import dependence, the prominence of batteries as a means of achieving greater energy security came into the spotlight.Electric vehicles have driven lithium demand for about a decade now, especially in the past five years, but as China, the world’s biggest EV market, becomes saturated, it would be up to the rest of the world to pick up the slack, as it were, and make sure there is enough demand to motivate lithium miners to ramp up existing projects and develop new ones, such as Argentina’s Pozuelos-Pastos Grandes.By Charles Kennedy for Oilprice.comMore Top Reads From Oilprice.comUK Vows Global Climate Leadership as PM Doubles Down on Net ZeroCentral Asia’s B20 Message to Washington: Let’s Make DealsEurope Enters Winter With Its Lowest Gas Inventory of the 2020s