Lithium Exploration Challenges
Exploration activity in the lithium industry has rapidly increased during the last years, mainly motivated by lithium’s future use as a power source in hybrid and electric vehicles. Actually, in less than four years around 30 new junior exploration companies have announced more than 90 new lithium projects. Most of these projects are concentrated in Canada, Argentina, and in the US, and are still in an early stage of development, but others are in a more advanced stage and could start their production in the coming years.
Lithium is a strategic element for electrifying transportation. Practically there is a consensus among experts that lithium-based batteries are “the” option for an energy storage device in electric vehicles. A couple of years ago lithium availability was questioned given the expectations of lithium demand’s future, but nowadays the evidence shows that lithium is abundant.
Chile has the largest lithium reserves in the world. According to the US Geological Survey (USGS), almost 75% of the lithium reserves are located in the Salar de Atacama, in the north of Chile. These reserves also have the highest quality among other lithium-brine deposits: lithium and potassium concentrations are significant; magnesium to lithium ratio is low; and the evaporation rate in the Salar is one of the highest in the world (the Atacama Salar is located in the Atacama desert, the driest desert in the world).
Chile also concentrates the world’s production; almost 42% of worldwide lithium supply is produced in Chile, by SQM and Chemetall (Rockwood). However, of the nearly 100 projects that have been announced, only two exploration projects are being developed in Chile. This is because in Chile lithium is considered as a strategic element, therefore the government, through the Chilean Nuclear Energy Commission, regulates its use. This is why lithium is not available for new exploitation. The key point is if lithium should be considered as a strategic mineral or not. As in the US lithium is neither considered a strategic material nor a material critical to national security, the Chilean government is willing to change the regulation and to open the industry to newcomers. But before doing that, political consensus is required.
If Chile removes the barriers and allows the entry of new competitors, the country will maintain its leadership in the industry and probably many of the projects that have been announced for other companies may not materialize, as they will not be as competitive as the deposits in Chile. The same situation applies to Bolivia. If the government finds the appropriate partner to co-develop the Uyuni Salar, Bolivia could became an important player in a near future
But in the meantime, more than 90 projects are being developed and are “making noise” to raise capital, which undoubtedly shows the appetite that exists in the market for lithium and proves that there is plenty of it.
Daniela Desormeaux is the General Manager of signumBOX, a is a Chilean based consulting Company founded in 2009, which offers market intelligence in industries related with natural resources, chemicals, construction, housing and technologies.
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