Lithium is a strategic material and energy transition. Global lithium production has tripled in a decade, from 25,000 tons in 2010 to over 100,000 tons in 2021. Australia and Latin America – hold 80 percent of mining production.
According to the most recent US Geological Survey (2022), Latin America holds 63 percent of all identified world’s lithium reserves. These are located mainly in Bolivia, Argentina, and Chile, also called the “Lithium Triangle”. Demand for lithium has jumped 20 percent in recent years, as more consumers choose electric vehicles, and is likely to continue growing as high fuel prices push more to transition to electric modes of transportation.
And on the other side, according to the US Geological Survey, Mexico has the 9th largest identified lithium resources in the world (1.7 million tons).
“Currently, however, there is no commercial mining exploitation of lithium in Mexico. Only some exploration projects in Jalisco, Guanajuato, Nogales, Sonora, and Puebla,” explains Sandeep Wasnik, International Business Advisor of Prasaditya Group, India.
According to him, “Recently, President of Mexico Andres Manuel Lopez Obrador issued a Decree (published in the DiarioOficial de la Federación on August 24, 2022) setting up a new state-owned company called LitioMx (Litio para-Mexico), which will be responsible for managing the exploration, mining exploitation, and refining of lithium throughout the national territory of Mexico, as well as controlling the economic value chains of this mineral.”
The new agency will begin to operate within 180 days from the publication of the Decree. “A potentially vast lithium deposit in Mexico’s northern Sonora state could be worth as much as USD $602 billion (12 trillion Mexican pesos),” he adds.
“The world average price rose from US$5700 per tonne in November 2020 to US$60500 in September 2022. Lithium carbonate prices in China recorded high of CNY 597,500 on November 11th as Chinese authorities will cancel subsidies for battery manufacturers at the beginning of next year, slightly easing the soaring demand growth for input materials amidst the boom within the sector. Prices were also pressured by the arrival of lithium from South America, easing concerns of supply deficits. Still, sustained bullish demand in the sector kept prices 113% higher year-to-date,” Wasnik explains.
In June 2022, Summit of the Americas, which took place in the US, Argentinean President Alberto Fernandez and Chilean president Gabriel Boric together, launched the Bi-national Working Group on Lithium and Salt Flats. This working group has already held its first meeting in which top officials of both countries were present. Additionally, Argentina has been having discussions with Bolivia’s state-owned lithium company, Yacimientos de Litio Bolivianos, while Mexico, with its sector at a more nascent stage of development, is also in communications with Bolivia.
Lithium producing countries like Australia, Chile, China, and Argentina, to countries with recently aligned resources and reserves like Mexico, Canada, Bolivia, the US, and Ukraine, to locations typically not associated with lithium such as Siberia, Thailand, the UK, and Peru, exploration for conventional deposits of “WHITE GOLD”. The new potential includes conventional brines with concentrations of between 200 and around 2,000 parts per million (ppm), also hard-rock assets, where grades of 0.4 to 1.0 percent lithium are common.
Each of the countries which form the lithium triangle (Argentina, Bolivia, and Chile) has taken an, exceptionally different approach to the industry, with Bolivia’s state-controlled project on one end of the spectrum, on the other hand Argentina’s liberal stance, and Chile is somewhere in between.
However it is far from clear that any of them will be able to quickly ramp up production to ease supply shortages that governments of these countries will reap windfall revenues while the high prices last. Some have floated an idea of an OPEC-style organization in Latin America that would ensure fair and stable prices for lithium producers and an economic and steady supply to consumers.
