Production of lithium carbonate will start in June at the Exar mining company’s Olaroz-Cauchari project in Jujuy province, the result of an investment of almost US$1 billion. There have been only two active lithium projects in Argentina since 2016 when the Sales de Jujuy mine started exporting. More than six others are in the works, set to start operating in the short term, and they could turn the country into the world’s second-largest lithium producer. 

In this context, Vice President Cristina Fernández de Kirchner demanded a “strategic view” for the exploitation of this highly-demanded mineral this week, and her words spiked anger among governors of northern provinces. 

The Olaroz-Cauchari project is located in the Susques district, 4000 meters above sea level. After finishing construction and testing purification and carbonation systems, the first stage will start in June with their first pre-commercial productions, company head Franco Mignacco confirmed to Télam. The resulting 100 tons will be exported to China. 

Afterwards, the company will progressively increase production until it reaches 40,000 tons a year of lithium carbonate for batteries, starting in 2024. With that capacity, it will be the largest production facility in Argentina, as they expect to add 20,000 tons more in a second phase. When at full capacity, the company estimates it will employ 700 direct and 1500 indirect workers, and anticipates 60% of them will be from Jujuy.

Olaroz-Cauchari, Argentina’s third lithium project, is the result of a US$979 million investment made by the Exar company, a firm controlled by China’s Ganfeng Lithium and Canada’s Lithium Americas Corp. As in every project developed in Jujuy, provincial law entitles the state to an 8.5% share through the state-owned company Jemse, which can access up to 5% of production to supply local demand. 

For several years, there had been only two lithium projects in Argentina, starting in the 1980s with the US company Livent in the Hombre Muerto Salt Flat in Catamarca. And since 2016, in the Olaroz Salt Flat with the Australian company Allkem, in Jujuy. This third project signals that China and the US will be the main players for lithium in the country. Between the first two projects, production was at 37,500 tons per year, but both mines are expanding. The two companies also have started a global merger process, which will result in the third largest lithium-producing company in the world. While Economy Minister Sergio Massa will hold meetings in China with giant mining companies, his staff is looking to close a trade agreement to export lithium to the US.   

Despite having the second largest reserves in the world, Argentina is only the fourth biggest lithium producer below Australia, Chile and China. However, there are six projects in the works, so the economy ministry estimates that the country could become the second largest global producer before the end of the decade, reaching 200,000 tons per year in 2025, exporting more than US$5 billion. 

Cristina Kirchner’s claim

This is the context in which vice president Cristina Kirchner, in her May 25 speech in Plaza de Mayo, demanded all political forces have a “strategic view” for lithium.

 “I’m not saying you should make electric cars here, but brother, at least make part of the battery, or the entire battery here, since you’re making so much money,” she said. 

Current projects that are underway to add value to lithium production are scientific initiatives like the YTEC battery plant in La Plata, in the context of a joint project of the University of La Plata and oil company YPF, which carries out lithium exploration through YPF Lithium in Catamarca. There are two bills being drafted by the economy ministry, the Casa Rosada, and governors from northern provinces that aim to industrialize lithium through a system of quotas and preferential prices for the domestic market, together with variable export duties according to the degree of added value. There is also a new electromobility bill. But none of them have reached Congress, and they are certainly not expected to pass in an election year. 

Kirchner was also very critical of Jujuy governor Gerardo Morales. Without mentioning him, she questioned him for saying that new legislation in Bolivia and Chile is making investors turn to Argentina. 

“What an urge to be a colony, man”, she said in Plaza de Mayo. 

Her words irritated the governors. Morales had said that phrase last week at the Arminera fair, in La Rural, and was cheered on stage by governors Gustavo Sáez (Salta) and Raúl Jalil (Catamarca) who shared that thought. 

Deep down, the debate is whether there is enough to create an intervention strategy, official sources commented: with the nationalization of lithium, Bolivia stopped producing, and they are the country with the largest reserves in the world. Meanwhile Argentina, with no change in legislation, received US$5 billion in investments for this mineral.  

Interior Minister Eduardo “Wado” de Pedro, a potential presidential candidate of Kirchnerism, said in an interview that he is in favor of “nationalizing” lithium, a notion rejected by governors who claim the minerals belong to the provinces due to the constitutional reform that took place in the 1990s.

Originally published in Ambito.com / Translated by Agustín Mango