Argentina 'most attractive' Lithium Triangle jurisdiction for brine projects: mine developer

Argentina is currently more attractive to investors in lithium brine projects than its Lithium Triangle neighbors Chile and Bolivia, despite some regional permitting restrictions, an executive with explorer and mine developer Argentina Lithium & Energy Corp said in an interview.

The three nations are the US Geological Survey's top listed holders of measured and indicated lithium resources. Of the three, Argentina is expected to increase production most quickly due to its openness to investors.

According to USGS and government, Bolivia's lithium resources rose in 2023 to 23 million mt, the world's largest. However, only a small fraction has been exploited.

Argentina in second place has 22 million mt resources and third ranker Chile 11 million mt.

Strategic mineral

In Bolivia, lithium was designated a strategic mineral in 2009, to be owned by the Bolivian people. State-owned Yacimientos de Litio Boliviano, or YLB, in 2017 became responsible for production and processing. While not precluding participation of minority foreign investors in the value chain, frequent changes in the country's mining legislation are recognized to have created a lack of transparency and there are "huge political and social hurdles to getting anything done," Miles Rideout, Argentina Lithium & Energy Corp's vice president, exploration, told S&P Global Commodity Insights.

USGS does not list any lithium production for Bolivia for 2023.

Since Chile designated lithium a strategic mineral 12 years ago, exploitation has been increasingly restricted amid rising costs, Rideout noted. Legislation introduced April 2023 effectively nationalising the sector means lithium investors in Chile now need to partner with the state, namely copper giant Codelco, which from 2030 will hold the controlling stake in all lithium operations in the key Atacama salt flats.

Although Chile's previously open mining investment tradition is tightening, the country's lithium mine production grew to 44,000 mt in 2023, from 38,000 mt in 2022, being the world's second biggest producer after Australia -- which upped output to 86,000 mt in 2023 from the previous year's 74,700 mt - as demand for lithium for electric vehicle batteries grew, USGS data shows. A 23% jump in world mine production in 2023 to 180,000 mt (excluding US output) is held partly responsible for last year's price plunge in the light metal.

Chile's two biggest producers are Albemarle and Sociedad Quimica y Minera de Chile, or SQM, both listed on US exchanges. New projects are reportedly slowing as investors digest the new rules.

Argentina's 2023 lithium mine output climbed to 9,600 mt from 2022's 6,590 mt. Production is set to increase significantly as projects worth an estimated total of $7 billion are developed by global miner Rio Tinto, Arcadium Lithium (a merger of Australia's Alkem and US' Livent), South Korea's Posco, China's Ganfeng Lithium, Canada's Lithium Americas and junior companies including Argentina Lithium & Energy. This latter, backed by carmaker Stellantis, has four projects in the southern cone nation, two approaching production stage.

"Chilean nationalism could push investor interest to Argentina," Rideout believes. "There is a cost to dealing with regulatory restrictions in Chile."

Argentina's 3% net smelter royalty paid by lithium producers is cheaper than equivalent charges in Chile and Bolivia.

Investors continue attracted to Argentina because of favorable lithium mining regulations, despite the nation's uncertain economic health. Neo-liberal President Javier Milei is taking steps to curb inflation and promote investment, which should alleviate foreign investors' concerns, Rideout believes.

Permitting suspension

A suspension on the granting of new lithium exploitation licenses in the Salar del Hombre Muerto basin by Argentina's Catamarca provincial supreme court can meanwhile be viewed as a responsible step, Rideout said.

The suspension, introduced following a case presented by a local community group, will continue in force until the provincial government can present a comprehensive environmental impact study for the total impact of all producers operating in the basin, including Posco, Arcadium Lithium and Alpha Lithium.

"The concerns are primarily over surface water," Rideout said. "It may be prudent to encourage more companies to invest in process water recycling and to develop subterranean water resources, that might moderate their use of surface water."

New lithium brine projects typically consider maximizing water recycling from an early planning stage and several direct lithium extraction technology providers claim the ability to utilize 100% recycled water. Rideout affirms this is the direction the industry should go to reduce community concerns.

While Argentina Lithium's major Antofalla North project is also located in Catamarca province, it is in a different basin to the one where new permitting has been temporarily suspended.

Nonetheless, outcomes and requirements determined by the Salar del Hombre Muerto proceedings are likely to set a base for future lithium basin development, according to Rideout.

Pumping of brine from salt flats is considered relatively low impact compared to hard rock lithium mining, particularly as DLE can allow depleted brines to be reintroduced into basins.