South America’s white gold rush has begun

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The Lithium Triangle

July 09, 2024

Image courtesy of Albemarle

After reaching peak prices in 2022, the lithium market faces a considerable oversupply, resulting in a more than 75% price drop over 2023, with battery-grade lithium carbonate prices in China collapsing significantly. This price decline reflects an accelerated ramp-up in production capacities, anticipating robust demand growth, which has not materialized as expected. 

Current global lithium production has seen substantial growth, with supply anticipated to increase by 30% by year's end. Electric vehicle (EV) batteries are largely responsible for demand increasing. Although EV adoption grows—EV sales in the USA were up 40% in Q1 2024, according to Cox Automotive— the pace is slower than anticipated; Bloomberg New Energy Finance projected sales of 1.7 million plug-in vehicles in 2023, but only 1.46 million were sold. EV giant Tesla’s sales were down 41% in Q2 2024, its first drop since the pandemic, a further indication of lower EV adoption. “EV adoption and infrastructure for grid support for EV adoption need to catch up to demand. The energy transition is intricately linked, resembling a spider web connecting various elements. It goes beyond just supplying lithium for EVs; it encompasses a global initiative to facilitate this shift” noted Amanda Hall, CEO and founder at Summit Nanotech.

Declining prices do not mean declining demand: in 2030, global demand for lithium is expected to exceed 2.4 million t/y of lithium carbonate equivalent, doubling the demand forecast for 2025. “If the world wants to evolve into a green energy economy, it will need every single lithium project that is currently on the slate to come into production,” said Steve Kesler, executive president at CleanTech Lithium.

Australia is the world’s current leading supplier of lithium, producing 86,000 t of lithium in 2023. However, Australia’s operations are dominated by hard rock production, causing environmental concerns about their long-term sustainability; lithium derived from hard rock is three times as carbon-intensive as brine operations. With the rise in responsible mining and consumer consciousness, lithium will increasingly need to be sustainably sourced. The lithium triangle—a high-altitude area straddling Chile, Argentina and Bolivia, which holds 56% of the world’s lithium reserves — presents itself as the perfect opportunity. “There is enough lithium in Chile alone to satisfy the world's needs, which can be sourced entirely from brine,” said Hall. 

Chile: the lithium triangle’s hypotenuse
Chile is the world’s second-greatest producer of lithium, responsible for 44,000 t in 2023. President Gabriel Boric announced Chile’s National Lithium Strategy (NLS) in 2023 to enhance private sector involvement across the lithium value chain while maintaining selective state control in public-private partnerships. The signing of the Memorandum of Understanding between SQM and Codelco in December 2023 was a landmark event for Chile’s lithium industry, enabling SQM to increase production by 30,000 t/y of lithium carbonate equivalent and extend operations for 30 years. Codelco will own a slight majority share at 50+1%, according to the contract. Mark Wainwright, managing director at Turner & Townsend, said: “These moves within the Chilean lithium industry present potential benefits but may concern investors wary of government involvement because it is clear the present regime sees lithium as a strategic asset. Although it is too early for definitive judgments, the continuation of licenses for existing private companies signals a positive direction. However, market sentiments remain mixed.”  

Chile has 69 saline environments; in 2024, the government declared 31 protected, two strategic—requiring state-owned Codelco or Enami to be a majority partner—and five with Codelco and Enami presence, but not necessarily as a majority partner. This leaves 31 salt flats for exclusive private entity development. "Now that the government has defined the rules of the game and eliminated the elements of uncertainty, investors are starting to make decisions,” said Joaquín Villarino, executive president at Consejo Minero.

On April 15th, 2024, the government launched a request for Information (RFI) process for investors and private companies. The process will last 60 days, and the results will be announced in July. Any company can purchase lithium concessions in an area if it does not have other mining claims. The company must be granted a Special Operation Contract for Lithium (CEOL) by the government. “This news will allow us to define the lithium deposits for which the State will begin the process of awarding CEOLs, after carrying out an indigenous consultation process where applicable,” explained Minister Aurora Williams in the press release. 
This should also help advance late-stage projects like Cleantech Lithium’s Laguna Verde and Francisco Basin, which have applied for CEOLs and will contribute a minimum considered annual production of 20,000 t of lithium carbonate each, according to Kesler. 

Direct lithium extraction
As part of the National Lithium Strategy, companies are required to extract lithium through DLE, and with good reason; “With evaporation, up to 40% of lithium reserves are lost, whereas with DLE, we can achieve up to 99% extraction efficiency,” explained DLE technology company Adionics’ CEO, Gabriel Toffani.

DLE technology is relatively new, “Seven years ago, DLE was almost unheard of, with Livent in Argentina operating the only project,” said Kesler, who explained the three principal types: “Adsorption involves passing brine through columns of resin, where lithium is adsorbed. After extracting lithium, the brine is reinjected into the aquifer, without altering the brine's original chemistry, unlike ion exchange, which can to a certain extent acidify surrounding soil upon brine reinjection. Solvent extraction, while quick, poses challenges in eliminating organic materials during entrainment from reinjected brine.”

The technology is advancing rapidly. In 2023, SQM partnered with Adionics to pilot their technology. “Initial testing lasted 500 hours”, explained Toffani, “subsequently, we conducted an additional 1,000 hours of continuous testing at the Atacama pilot to evaluate the conditions necessary for transitioning to an industrial scale.” 

In April 2024, Chile’s national mining company Enami announced that it would consider 30 proposals from 12 countries to deploy DLE technologies at its US$1.5 billion Salares Altoandinos project in the Atacama region. Summit Nanotech was one such proponent. A committee will choose five technologies that will be compared in terms of lithium recovery and energy consumption.
 
Argentina 
Argentina, currently producing 34,000 t/y of lithium, is on track to become the world's third largest producer by 2027, with the potential to increase output to 260,000 t/y, indebted to the 18 projects forecasted to start production by 2027, according to analysis by CRU. 

In April 2024, Elon Musk and President Javier Milei met at Tesla’s headquarters in Texas to pledge cooperation to enhance free-market principles and explore lithium mining opportunities. Despite the buzz, the meeting likely does not signify much. As outlined in the Argentinian constitution, natural resources are the property of the provinces, meaning the provinces manage licenses and grant permits for mining exploration and production. While Milei can set the national mining policy and promote investment, ultimately, decisions are made at the province level. Yet, Milei’s enthusiasm will be beneficial. “The current government's commitment to attracting large-scale mining investments is crucial, given the substantial capital required for development,” said Ignacio Fernandez, general manager LATAM at Terra Nova Technologies.
Despite growth, the country faces challenges: “One major hurdle in Argentina is the importation of sophisticated mining equipment, which may not be readily available locally, coupled with currency mobility issues,” continued Fernandez. 

Chile is well-positioned to support Argentina, suggested Filo Corporation CEO Jamie Beck: “The Mining Integration and Complementation Treaty recognizes the necessity of collaboration between the two countries for the development of significant deposits like ours. It allows us to explore across borders, utilizing resources and personnel from both nations. This arrangement also opens avenues for sharing infrastructure such as power, water, roads, and transportation, which will be crucial for future development.” 

Although Filo is a copper exploration company, the treaty extends to lithium mining. 

The rapid development of the sector could also lead to infrastructure and logistics bottlenecks, as many operations are in remote regions of the country. Logistically, Chile can assist neighboring Argentina. "Concerning the lithium sector, an important consideration is the natural suitability of Chilean ports for Argentina's lithium producers, as they are only half the distance from alternative ports in Argentina." offered Tomás Valenzuela Somerville, vice president, mining, energy & regional offices at AGUNSA.

Bolivia
Bolivia possesses the world’s largest share of lithium reserves, amounting to 24% of the world’s total. Despite vast reserves, Bolivia has struggled to capitalize on its lithium potential compared to its neighbors, largely due to extraction method challenges and conflicts with indigenous communities. Metaproject CEO Manuel Viera Flores, asked: “What is the use of being rich in the subsoil and poor on the surface? Bolivia has one of the biggest lithium deposits in the world, but also immense poverty because it has not been exploited.”

The Bolivian government has shown a renewed commitment to the metal, aiming to generate US$5 billion from lithium sales by 2025. In July 2023, Bolivian state-owned Bolivia Lithium Deposits (YLB) identified new lithium resources, bringing the total to 23 million t of identified resource. In January 2024, Bolivia's government signed an agreement with Chinese consortium Catl, Brunp, and Cmoc (CBC) to develop a US$ 90 million pilot plant to extract and process lithium at the Uyuni Salt Flats, with an initial production capacity of 2,500 t/y of lithium carbonate. The plant plans to yield first lithium by year end 2025.

The global white gold rush has begun, and the lithium triangle has ample expertise, reserves, and technologies to meet the world’s evolving needs.

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