Feature: Paraguay set to emerge as a key player in South America's Lithium Triangle

Historically focused on gold extraction, Paraguay is now strategically positioning itself to capitalize on the burgeoning lithium market, situated between Argentina and Bolivia. This year marks a shift as the South American nation embarks on the certification and prospecting phase for lithium in the Chaco region.

Vice Minister of Mining and Energy Mauricio Bejerano has reported promising developments in the ongoing certifications.

"This effort can yield invaluable information for Paraguay, and we are backing an investment that carries substantial risk in a region where such activities have never been undertaken," Bejerano said recently in comments posted on the ministry's website. "We are pleased to be on-site to support these initiatives."

These multi-year projects aim to integrate Paraguay into the region's Lithium Triangle, alongside Chile, Argentina and Bolivia.

Chaco Minerals, part of a consortium of five companies that employ advanced technology in their prospecting studies, is leading the lithium certification process in the region. Each company in the group is assigned an area of 400,000 hectares, covering a total of 2 million hectares in the Paraguayan Chaco.

Néstor Bernal, director of mining at the vice ministry, noted the significance of the initiative.

"We are actively involved in the geophysical prospecting efforts led by Chaco Minerals, a pivotal lithium production project for the country, especially given the surging global demand for critical minerals, particularly lithium, essential for battery production and the energy transition," Bernal said on the website.

The initiative represents a committed investment of $30 million and will take about five years to complete. The first year of this process was finalized in 2024.

The Paraguay Ministry of Public Works and Communications issued a report about the ongoing project, confirming that the second stage is already in progress in 2025.

"We are also studying our natural resources, especially subterranean waters, which are essential for the development of the Chaco Minerals project," the ministry said.

The Chaco basin, located in Northwestern Paraguay, has one of the highest evaporation rates in the world, helping alleviate concerns about water consumption in the region.

Following the current prospecting certification phase, the reserves must be tested to verify if sustainable mining can be used to exploit lithium, at a cost of $60 milion-$70 million. Subsequently, a pilot plant would be constructed, with a total cost of around $700 million.

The second phase of the airborne magnetotelluric prospecting study by Chaco Minerals is underway.

"The first phase was highly successful, covering an intriguing area within our region," said Rodrigo Díaz Mallorquín, Chaco Minerals general manager, on the mining ministry website. "As we advance into the second phase, we anticipate achieving similarly positive results. The process is progressing well, with continuous support from the authorities."

In total, this project would take up to seven years before the lithium could be exploited, Mallorquín added.

"This process will enable us to compete in the batteries market with Chile and Argentina and attract electric vehicle companies," he said.

The Platts daily Lithium Triangle (LiT) price assessment Feb. 19 was $9,300/mt, stable on the day and down 7% since it was launched Sept. 2, 2024.

Platts is part of S&P Global Commodity Insights.