Russia no longer receives lithium carbonate from Chile, Argentina: ministry

Chile and Argentina have suspended lithium carbonate shipments to Russia, several Russian news agencies reported, citing an official at the Russian industry and trade ministry who said Bolivia will now be key to the country's lithium supply.

Lacking its own production of lithium raw materials, Russia normally receives lithium carbonate from Chile, Argentina, China and Bolivia, according to the official, who did not mention the US -- the second-largest lithium carbonate supplier to Russia in 2021, according to data available on the Russian Federal Customs Service website.

Should Bolivia suspend its supplies, Russia will face a big problem in meeting its needs for lithium-ion batteries because China alone is unlikely to fill the breach as the country itself is experiencing a shortage of this raw material, the official said at an industry meeting at the Federal Council, according to media reports.

The ministry did not respond to S&P Global Commodity Insights' request to confirm the information.

The ministry did not specify whether in the absence of any such sanctions supplies from parts of Latin America were suspended as a result of directives at the government level, or because exporters or shipping companies they work with imposed self-restrictions.

"In the current context, it would be unwise to see any supplies as something guaranteed," a source within the lithium industry in Russia said.

"Certain countries might not join in sanctions against Russia, but miners operating there and coming from different jurisdictions may follow own initiatives," he said, referring to sanctions resulting from Russia's invasion of Ukraine.

Major producers

In Chile and Argentina, a few companies make lithium carbonate, but the major producers are SQM, Albemarle, Allkem and Livent, of which SQM is Chilean, Albemarle and Livent are headquartered in the US, and Allkem in Australia.

"We are not aware if such [government] directive has been issued," an SQM representative told S&P Global.

"When it comes to lithium carbonate, we continue with all our obligations under a tolling agreement we have with a Russian producer, apart from any logistical issues and compliance with the existing sanctions," the representative said.

Kelli Hopp-Michlosky, Albemarle vice president, head of global communications, told S&P Global: "We cannot speak on behalf of the Chilean government, but what we can say is that Albemarle lives by its values. ... In response to Russia's actions, we have suspended shipment of products and technologies to Russia."

The company continues to monitor the events in Ukraine closely and has no timeline at this point for reinstating shipments to Russia, Hopp-Michlosky said.

Albemarle suspending sales to Russia could also mean a cut in volumes Russia normally receives from the US, its second-biggest supplier of lithium carbonate after Chile. Albemarle, which operates two lithium producing sites in Chile, also has a 6,000 mt/year lithium plant in Nevada, in the western US, where the company is a major lithium producer too.

A spokesperson for Livent, which has operations in Argentina, told S&P Global the company has no customers in Russia and does not ship there.

Allkem did not respond to S&P Global's emails by the time of publication.

In 2021, Russia imported 9,040 mt of lithium carbonate, with Chile (6,141 mt) and the US (1,280 mt) being the largest sources, accounting for 68% and 14% of these imports, respectively. Roughly 1,000 mt came from Argentina, which corresponds to 11% of the total; China and Bolivia supplied 340 mt (3.8%) and 220 mt (2.4%), respectively, according to the Russian Federal Customs Service.

Extraction from reservoir brines

"If the country's provision is indeed in jeopardy, it should prompt the development of lithium deposits within the country, and it likely will," the Russian lithium industry source said.

The country is already testing direct lithium extraction from reservoir brines at the Kovykta gas field in the Irkutsk region in Siberia, within the framework of a joint project between Gazprom and Irkutsk Oil Company, which S&P Global reported in February.

"I am a believer in prospects of producing spodumene concentrate at one of Russia's largest untapped deposits of spodumene pegmatites -- Kolmozerskoye," the source said, referring to the location near Kolmozero Lake, in the Murmansk region, on the Kola Peninsula.

It holds enough to meet Russia's needs in lithium raw material. Developing it some 20 years ago was deemed unprofitable, but is worth a shot in the current market, the source reckoned, adding that putting its license out for bids may be a matter of several months.

The volume of Kolmozerskoye's lithium content has not yet been publicized; the US Geological Survey has estimated Russia's total lithium resources at 1 million mt.