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‘White Gold’ AKA Lithium Set To Take Off In Argentina

By | [email protected] | August 23, 2016 12:40pm


Used in batteries, lithium is found in almost every electronic device today and Argentina is at the epicenter of its production. With electric and hybrid cars taking off around the globe, along with energy storage for renewables, the price of this element is skyrocketing along with demand as our appetite for portable electronics continues to grow. For this reason, the financial industry has been hyping up the metal by calling it “white gold” and “the new petroleum,” and even though this was the same crowd who called Argentina in the 1990s “an economic miracle,” they’re probably not far off on this one.

While in Buenos Aires cafes, it’s common to overhear conversations about how Vaca Muerta (one of the largest oil and gas deposits on earth) is going to make Argentina rich, there’s not even a murmur about lithium. Even so, Argentina overtook China last year to become the world’s third-largest producer, with the country’s mines pumping out 3,800 tons of the stuff per year, Investing News reports. Still, that figure seems paltry when compared to Australia and Chile, which produce around 13,000 tons each.

According to Reuters, around 70 percent of the world’s reserves lie in the so-called “lithium triangle,” an area which covers North-Western Argentina, Northern Chile and Southern Bolivia. Current estimates on just how much is in the region vary, but it’s split roughly evenly between the three countries, so saying that Argentina has room to grow is an understatement, particularly as Australia has far fewer deposits and Chile’s production is beginning to stall due to a number of factors.

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Still, Chile is already producing a lot more than Argentina, so why the late start? The three main factors are the bad press and lack of confidence Argentina received following the tussle with the vulture funds, the 5 percent export duty on mining imposed by the previous government and deteriorated infrastructure. With the holdout dispute resolved and the tax lifted, those are two major obstacles gone and a large number of international mining companies of all shapes and sizes have already begun investing in a big way, either by restarting stalled projects or beginning starting up new ones.

On the other hand, infrastructure is far more time consuming to amend, but despite this, the famous Salta-Antofagasta rail line began operating again late last year and other key lines around lithium-producing areas have had investments granted. This means that the provinces of Salta and Jujuy (two of the largest potential lithium producers) once again have a cost-effective logistics route to the Pacific via Chile, where lithium can then be exported to China and be turned into batteries for your smartphones.

Though the environmental impact of lithium mining is significantly less than that of other metals given that the deposits are found at surface level in salt flats, the impact of the lithium-ion batteries themselves is still a major problem. Their lifespan isn’t that great (as anyone who has owned a laptop for a few years will have realized), they’re impractical and expensive to recycle and they mostly end up in landfills. This is just one of the ironies of our electric car-powered green future which, along with the fact most electricity in the world today comes from non-renewable sources, means that the problem is being offset rather than resolved with current technology. On the other hand, they do allow the privileged to convince themselves (and others) that they are doing their bit for the planet. Still, even YPF has gotten in on the action, investing US $60 million to produce lithium-ion batteries this year, El Observador reports.

Despite these obvious caveats, demand continues to grow exponentially and Argentina will be one of the beneficiaries, but just what the impact will be of the Lithium boom and Argentina’s dormant deposits remains to be seen. According to La Nacion, companies from all over the world are carrying out multi-million dollar investments to turn the country into a global production leader, describing the situation as a “war” between companies to try and get their hands on it. However, just how much of that money will benefit ordinary people living in the North-West is unclear. Though the mining companies claim that it will result in a significant number of jobs being created, without the mining tax there will be less money for the state to spend on schools and infrastructure and the profits will mostly go abroad. What is certain is that we’ll be seeing this metal make headlines more and more in the coming years.