Mr. Lithium Has Advice for Argentina to Capitalize on its White Gold Rush

Buenos Aires — Joe Lowry is known as “Mr. Lithium”, has worked in the industry for more than thirty years, and says he took part in the first sale of the metal for the manufacturing of electric batteries. He is also familiar with the evolution of the business in Argentina, ever since its inception with the construction of the FMC plant of the Fénix project in the Salar de Hombre Muerto, Catamarca province, which is now operated by Arcadium Lithium, the merger of Livent and Allkem.

Lowry, director of the consulting firm Global Lithium LLC and host of the Global Lithium Podcast, was in Argentina this week to visit the Cauchari project in the province of Jujuy, which he has also been involved with and will become the country’s third lithium carbonate producer in 2023. He also took part in setting up the agreement between the Chinese company Ganfeng and the Canadian company Lithium Americas (now Lithium Americas Argentina), the two main shareholders of the project operated by Minera Exar.

“Mr. Lithium” is bullish on Argentina’s lithium horizon, but skeptical of the government’s official forecast figures. He says that the country’s advantage lies in its production costs and that the focus should not be on producing electric batteries, but rather on improving the infrastructure of the Puna region in the northwest of Argentina, where the salt flats and lithium projects are concentrated.

He also says, in an exclusive interview with Bloomberg Línea, that the recent meeting between Javier Milei and Elon Musk had little to do with Argentine lithium, and that the country should not worry about its entry or not into Joe Biden’s Inflation Reduction Act.

The following conversation has been edited for length and clarity.

What is your take on the development of the lithium sector in Argentina to date?

Argentina is a first world country. But sometimes there are companies that come here and treat it as if it were the third world. And that is a problem. And Argentina, whether it is the provincial or federal governments, should treat it as a problem and should do something about it. Beyond that, in a context in which costs have gone up a lot, reagents have gone up and capital has gone up, Argentina has an advantage and that is that it is still at the low end of the cost curve.

The quality of the resource is often highlighted as well.

Yes. There are many resources here. Some are great, some are mediocre. I think most of the projects you’ll see money flowing to are world class.

Are you optimistic about Argentina?

I am. But if you go back and listen to what previous governments have said about Argentina producing 300,000 tons by this time, they have no idea. They don’t know what it takes. Producing high quality lithium is difficult. And Argentina was stuck in a very narrow range because it only had two producers. You had Hombre Muerto and you had Olaroz (both operated today by Arcadium Lithium). Now you have Cauchari, which is next to Olaroz. Hopefully some of the other projects will get going, but I don’t think Eramet will produce this year. I don’t think Zijin will produce this year.

Argentina’s goal is to be the third largest global producer by 2030. Is that possible?

I think Argentina is going to produce a lot more in 2030 than it produces now, but I don’t think most of the numbers you’ve heard are close. If they were at about 35,000 tons last year, to get to 300,000 in six years, I promise you that’s not going to happen.

How does the macroeconomic scenario and legal uncertainty in Argentina impact when making an investment decision?

I have talked to large U.S. companies that were interested in lithium. And if I talk to them about Argentina, they say no. It’s a no-go area for the economy, for the economy, for the legal uncertainty. It is a no-go area because of the economy, because of the policies. But there is a group of companies willing to take that risk. And what I always say about Argentina is that, whether it’s (Carlos Saúl) Menem, (Néstor and Cristina Fernández) Kirchner, (Mauricio) Macri or whoever, things happen. They may not happen as fast as people want them to, but I’m a big fan of Argentina. So I want to see progress. But you have to look at it with reasonable eyes. And these things take time.

And what is your advice in that sense?

I remember when I came here, in 2017 or 2018, there was a big move to make batteries in Argentina. They asked me to kick off the day they had to review everything. And I said, no, they don’t want me because I think it’s stupid to focus on batteries. And they insisted. I said, if you have a billion dollars to spend, build roads in the Puna, build gas pipelines, emphasize what you have an advantage, which is the lithium resource. Forget about making batteries, do you really want to try to compete with China, with Korea or with Japan on the battery when you don’t know anything about it? But you have lithium and you have low-cost lithium. But in the Puna there are limitations on the expansion of some of the projects up there, because there’s no natural gas, there’s not enough natural gas. It’s in the ground, but you have to have pipelines to get it to the projects.

Invest in infrastructure then.

Build the infrastructure, build your lithium ecosystem and become number one in brine lithium in the world, which can easily, well, not easily, but it is doable.

How do you view Argentina’s attempts to become part of Joe Biden’s Inflation Reduction Act?

I have said that the Inflation Reduction Act is overblown. It is not that important. I am an American, I should be a promoter of the Inflation Reduction Act. But when you really look at it, the significance in the future of what is done here is quite limited. Argentina doesn’t need the Inflation Reduction Act. It does not need a free trade agreement because this U.S. policy, which is one of the problems with the Inflation Reduction Act, is poorly drafted. They will have to make a lot of changes, and what they have to do in Argentina is to produce high quality lithium, and the world will come knocking on their door.

Javier Milei and Elon Musk met last Friday. And in every contact between them there are usually references to Musk’s interest in Argentine lithium. What do you think?

Apart from Milei trying to send signals to the world, I don’t think Javier Milei’s meeting with Musk means anything, honestly. The federal government does not control lithium, the provinces do. It’s good for Milei’s supporters and it’s good for Elon to try to communicate what he wants to say.

Also, Elon Musk is not directly involved in the resource.

No. Elon Musk’s Achilles heel is lithium. He has never spoken with depth of knowledge. He knows how it (lithium) works in a car. He knows how it (lithium) works in a battery. So, that’s fine. But every time he talks about the market, he’s usually wrong.

How do you see the lithium price situation? Different companies have slowed down their investments in Argentina due to prices.

It is one of the big problems. Most of the things you read about the price are not true. The price of lithium was never US$80,000 (a ton). A price was, but very little quantity. Right now, the average price in the world is much higher than US$15,000, but China controls the narrative. And the Chinese have a reason to want to lower the price of lithium because they are the largest battery producer.

Is US$15,000 a ton a bad price?

Historically US$15,000 is a high price for lithium. For most of my career, 34 years in this industry, lithium was selling for less than US$5,000. Yes, costs have gone up, capital intensity has gone up, but US$15,000 is not a terrible price for lithium. And if you look at the last two cycles, from 2015 to 2018, the price went from well below US$5,000 to US$28,000, and then back down to US$5,300. I always like to look at SQM’s price, because they read the most. Last year’s Q4 was down to US$16,000. We don’t know for sure the Q1 number, but if that’s the low, and a lot of people think the low is in, it’s three times higher than last time.

And how does it impact Argentina?

Argentina has an advantage and that is that, regardless of the company we are talking about, Arcadium Lithium or Lithium Argentina, whoever it is, it has a good cost position. If you look at lithium producers around the world, Argentina is on what we call the left side of the cost curve, the bottom side of the cost curve.