Bloomberg Línea — Latin America is a major source of lithium, the key mineral for the electric vehicle industry, with significant reserves in Argentina, Bolivia and Chile, and although Bolivian production has not yet taken off, Chile is showing a significant degree of maturity in this area and Argentina is making steady progress.
According to data consolidated by the United States Geological Survey (USGS) up to 2021, there are four countries worldwide that account for 96% of lithium production, and which are the following, with their respective annual production volumes:
- Australia: 55,300 tons
- Chile: 28,300 tons
- China: 14,000 tons
- Argentina: 5,970 tons
Brazil also contributes to lithium production with 1,700 tons in 2021, says the USGS.
A recent report by the Economic Commission for Latin America and the Caribbean (ECLAC) states that the marked geographical concentration of lithium production is one of the reasons why the main lithium-ion battery producing countries have included the mineral on a list of critical raw materials.
ECLAC also points out that the relative participation of each country in terms of production has changed over the years.
During the 2000s, Chile had an average share of 40% of world production, while Australia’s share was around 23%. In that decade, China and Argentina also emerged, with shares averaging around 15% and 9%, respectively.
In the 2010s, the leadership changed and Chile’s share fell to 31%, while Australia’s increased to 44%. Between 2015 and 2021, when a marked increase in demand -a nd, consequently, in prices - begins to be recorded, the gap between the two countries widened and in 2018 the maximums reached were 60.2% for Australia and 19% for Chile.
In Latin America, the trend has been marked by the performance of Argentina and Chile.
Between 2000 and 2008, the region’s share of global lithium production was over 50%, with a peak of 57% in 2005. In 2016, Latin America and the Caribbean again contributed more than half of global production, partly sustained by the increase recorded in Argentina following the start-up of Salar de Olaroz, the second lithium operation in the country.
However, this situation did not last, given that 2017 saw the largest increase in production capacity in Australia.
Strong forecasts for the region, but with less global weight
The latest ECLAC report highlights that, in 2021, global lithium supply reached levels of around 500,000 tons of lithium carbonate equivalent. Based on project portfolios and recent announcements, there is consensus that the four largest producing countries - Australia, Chile, China and Argentina - will see absolute increases in their production capacity in the coming years.
In relative terms, however, their importance is likely to decline alongside the growing contribution of countries that do not currently have particularly significant lithium production, such as Canada, the United States and Zimbabwe, which are expected to increase their production considerably above current levels.
ECLAC pointed out that, although the region offers a promising outlook in terms of projects, its share could fall in relative terms. While in 2021, 37% of the lithium produced worldwide came from Latin America, this figure is expected to drop to 32% by 2030.
Type of production
In Chile, two large operations stand out in the Salar de Atacama with the Salar del Carmen, operated by Sociedad Química y Minera de Chile (SQM), and La Negra (operated by Albemarle) plants. Based on the planned expansions, together they would double their production from 2025.
For its part, the government has established a national lithium company (ENL) as part of its lithium mining development policy, which would lead the exploration and exploitation of lithium projects with private participation, but with state control, which in the near future could expand Chile’s portfolio of operating projects and production.
Albemarle produces technical- and battery-grade lithium carbonate and lithium chloride, while SQM produces technical- and battery-grade lithium carbonate and lithium hydroxide.
In Argentina, Livent’s production focuses on technical-grade lithium carbonate and lithium chloride. Allkem Ltd. produces both technical- and battery-grade lithium carbonate.
In Brazil, AMG Lithium produces spodumene concentrate.
In Bolivia, meanwhile, the government has been announcing agreements for the industrialization of lithium, but for the time being the country has a very small production, despite having one of the highest potentials worldwide. The strong emphasis that the Bolivian government has tried to place on this resource has delayed private development for the time being.
Although Bolivia has no commercial production, since 2017 there is a state-owned company called Yacimientos de Litio Boliviano (YLB) that has been trying to revitalize the failed attempts of lithium production in Bolivia, but without much success so far.
Projects under development
ECLAC states that Argentina is the country with the most lithium projects under development, which is because it has a regulatory framework open to international private investment. Its neighbors in the lithium triangle (Chile and Bolivia), as well as Mexico, also have legal frameworks in place that assign lithium a strategic nature and impose restrictions on private investment.
In the case of Chile, the country has much potential thanks to the Salar de Atacama, but the exploitation of other deposits is subject to administrative contracts or special operating contracts that the state has not yet used.
These are the projects under development, as dentified by ECLAC:
- In Argentina, two projects that are already operational (Minera del Altiplano and Sales de Jujuy) are to be expanded, in addition to the construction of six new projects, two projects that have passed the feasibility analysis phase, three in pre-feasibility stage, five under preliminary economic evaluation and 20 in advanced exploration phase are underway, according to the mining ministry’s 2021 report. A particularity experienced in this country in recent years is the large number of mergers and acquisitions, which has brought new players into the lithium industry.
- In Chile, two large developments stand out, in the Salar de Atacama with the Salar del Carmen (operated by Sociedad Química y Minera de Chile SQM) and La Negra (operated by Albemarle) plants. Based on the planned expansions, together they would double their production from 2025.
- Brazil has the Mibra operation (operated by AMG Lithium), with a production capacity of about 5,000 tons of lithium carbonate equivalent and an expansion underway to increase production to 13,500 tons of lithium carbonate equivalent. Similarly, the Grota do Cirilo project (Sigma Lithium), which would have a capacity of more than 25,000 tons of lithium carbonate equivalent, is expected to come online by the middle of this decade. Thanks to these two operations and other relatively minor projects, Brazil will become a large-scale lithium producer in the coming years.
- Mexico has the Sonora project (currently owned by China’s Ganfeng Lithium), at a lithium deposit in enriched clays, located in the state of Sonora. It is currently under construction and is expected to produce around 35,000 tons per year of battery-grade lithium by the middle of the decade. The Mexican government recently created Litio para México (LitioMx), a state-owned company whose purpose is to explore and exploit lithium, as well as manage and control the economic value chain of the mineral.
- In Bolivia, the most advanced project to produce lithium compounds is led by the state-owned company Yacimientos de Litio Bolivianos (YLB), in the Salar de Uyuni. This project has a pilot plant, while the construction of an industrial plant with an annual production capacity of 15,000 tons of lithium carbonate equivalent is underway. In 2021, YLB issued the international call for direct lithium extraction for the Uyuni, Coipasa and Pastos Grandes salt flats.
Reserves and resources
The region maintains an important share, totaling 52% of global reserves. However, when analyzing individual countries, a significant imbalance is observed, since Chile alone accounts for 41% of the world’s reserves and Argentina for almost 10%, according to ECLAC.
These are the world’s lithium reserves, by tonnage, in order of size:
- Chile: 9.3 million
- Australia: 6.2 million
- Argentina: 2.7 million
- China: 2 million
- United States: 1 million
- Canada: 930,000
- Zimbabwe: 310,000
- Brazil: 250,000
- Portugal: 60,000
The remainder of the countries with lithium reserves have around 3.3 million tons, and include Austria, Spain, Finland, Germany, Ghana, Mali, Mexico, Namibia, Czech Republic, Democratic Republic of Congo, Serbia and Spain.
The case of Bolivia
Bolivia is the country with the most lithium resources in the world, but when it comes to reserves, it does not even appear under the heading “other countries”.
What is the difference between resources and reserves?
Lithium resources refer to an estimated amount of lithium that exists in the earth, in a particular geographic area. Lithium resources are measured in terms of tons and may include known, but not yet exploited, lithium deposits and potential lithium deposits that are believed to exist in the area, but have not yet been discovered or evaluated.
In contrast, a lithium reserve is a portion of a lithium resource that has already been evaluated and is expected to be extracted for sale. For a lithium reserve to be considered as such, a thorough evaluation of known lithium deposits is required, and aspects such as the quantity and quality of lithium present, how the lithium can be extracted and processed, the cost of production, and the expected price of lithium must be determined.
Although the Salar de Uyuni could position Bolivia very high in terms of global lithium production, the country’s strategic mistakes and the technical difficulties that the type of territory presents for extraction have prevented it from transforming the resources into reserves in order to know how feasible their exploitation is. That is why Bolivia, at the moment, does not appear on the map of exporters.
According to ECLAC, “Bolivia’s state strategy to exploit the resource has been based on the autonomous financing granted by the central bank. This has meant that the country has not needed, for the moment, another source of financing, but, at the same time, it has also limited the possibility of advancing more steadily with the necessary investments to explore and exploit the Uyuni salt flats”.
Countries with the largest lithium resources
Now, if what we evaluate is the amount of potential resources of each country, Bolivia comes into play and leads. This is the ranking of lithium resources according to the US Geological Survey:
- Bolivia: 21 million tons.
- Argentina: 20 million tons
- Chile: 11 million tons
- Australia: 7.9 million tons
- China: 6.8 million tons
- Germany: 3.2 million tons
- Democratic Republic of Congo: 3 million tons
- Canada: 2.9 million tons
- Mexico: 1.7 million tons
- Czech Republic: 1.3 million tons
- Serbia: 1.2 million tons
- Russia: 1 million tons
- Peru: 880,000 tons
- Mali: 840,000 tons
- Brazil: 730,000 tons
- Zimbabwe: 690,000 tons