Lithium Economics

Positioned to profit from growing lithium demand

Oct 26, 2017

In a recent interview with Chemical Week, Juan Carlos Zuleta, Lithium Economics Analyst, provides an update on what’s going on with the lithium industry in Argentina, Chile and Bolivia.

CHEMICAL WEEK

BY FRANCINIA PROTTI-ALVAREZ

PUBLISHED: MONDAY, OCTOBER 16, 2017

https://www.chemweek.com/CW/Document/Unauthorized/90675/Positioned-to-profit-from-growing-lithium-demand

The three countries that form South America’s lithium triangle—Chile, Argentina, and Bolivia—are seeking to develop a lithium industry to manufacture value-added downstream products rather than export all of the lithium as a raw material.

Corfo, Chile’s economic development agency that holds the country’s lithium reserves, released in August a shortlist of seven companies bidding to develop “value-added” lithium projects in the country. Meanwhile, recent changes that aim to improve Argentina’s infrastructure, as well as its legal and regulatory framework, have contributed to attracting lithium investments to the country.

Argentina ranks second behind Chile in lithium carbonate equivalent (LCE) production in the region and it recorded output of about 30,000 metric tons last year. The country has one of the largest lithium resources in the world: 9 million metric tons (MMt), according to US Geological Survey (USGS) estimates. “Argentina has been the main focus for lithium investors, attracting some $1.5 billion for lithium project development over the next few years. Meanwhile, Chile has attracted some $600 million,” says Juan Carlos Zuleta, a lithium economics analyst.

Chile’s production costs are the lowest in the world thanks to good environmental conditions at the Atacama Salar salt flat. It is also the largest player, having produced more than 63,000 metric tons of LCE last year, according to the USGS.

Albemarle announced plans recently to build additional LCE capacity in Chile in the early 2020s. The company has also requested that Corfo increase Albemarle’s production quota from 80,000 metric tons/year, to 125,000 metric tons/year of LCE. The introduction of a new production technology would make it possible to increase production without pumping additional lithium brine, the company says. Albemarle has agreed to sell 25% of its output at preferential prices to Chile-based firms that propose to make value-added products.

Meanwhile, Sociedad Quimica y Minera de Chile (SQM; Santiago) is also trying to increase its LCE capacity at Atacama from 48,000 metric tons/year to 63,000 metrics tons/year. “However, Corfo, which holds the lithium reserves, is now engaged in a legal dispute with SQM, and so has refused to raise its quotas, which the company is likely to use up by 2023. A final verdict is due in December,” Zuleta notes.

Bolivia’s attempts to increase its lithium production lag behind those of Chile and Argentina. Bolivia’s resources match those of Argentina, but the country has barely begun to exploit them, according to USGS. The Bolivian government hinted recently that it would collaborate with foreign players to establish a domestic lithium industry. However, Bolivia’s production was just 10–25 metric tons last year.

“The government in Bolivia envisions the lithium industry as a monopoly. It says it is advancing the production and industrial projects in parallel. However, production is still very low. The government is using the pilot plant at Uyuni Salar as a training facility rather than a testing one. While the government is seeking tenders for lithium carbonate processing plants, the production capacity required to push forward an industrial project is not there yet,” Zuleta says.

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