South America’s White Gold Rush

By Simon West

Driven by a clean energy transition with an insatiable thirst for metals and minerals, the demand for lithium – the key component in rechargeable lithium-ion batteries used in electric vehicles, or EVs – continues to surge.

A feared shortfall in supply of the “white gold” is spurring a mining boom in a cluster of salt flats straddling the borders of Argentina, Chile and Bolivia – a region collectively known as the lithium triangle. It is estimated that beneath these ethereal plains high up in the Andes lie about 60 percent of global lithium reserves.

Breakbulk movers active in the region are working to get a foothold in the burgeoning sector.

Madrid-based project forwarder Altius has already launched offices in Argentina, Chile and Bolivia. More recently, it has set up a multi-country team to support the sector and capitalize on project opportunities. The line-up comprises a project logistics expert and a forwarding specialist in each country, along with engineering and technical support from Spain.

Alejandro Porrua, managing director of the firm’s projects division, said the objective of the team was to share ideas, experiences and even some of the “crazy ways” of delivering projects for clients. “It is not easy to cross the Andes, and you have to take into account the weather conditions. There is a lot going on there that makes it fun working in projects!”


PROJECT PIPELINE PROMISING

Accounting for about a fifth of the world’s lithium reserves, the Argentine segment of the lithium triangle is concentrated in the northwestern provinces of Salta, Jujuy and Catamarca.

There, mining companies pump up salty water from underground salars – or salt flats – into enormous ponds where the liquid slowly evaporates leaving a brine with a high concentrate of lithium. The lithium is then extracted through chemical treatment and processing.

The nation boasts the world’s biggest project pipeline – according to S&P Global Market Intelligence, 14 of the 53 projects worldwide in post-preliminary economic assessment, or PEA, phase are located there. Argentine mining chamber Caem meanwhile predicts that spending on the country's lithium projects will surpass US$4 billion in the next few years.

Two projects in Argentina are already producing lithium on an industrial scale – the Salar de Olaroz in Jujuy province, operated by Australian group Allkem, and Mina Fenix in Catamarca, operated by US-based Livent. Several more projects are slated to start up in the coming years, including the Rincon plant in Salta, acquired by Anglo-Australian miner Rio Tinto in March last year for US$825 billion.

Following the acquisition, Rio Tinto’s board approved US$194 million to build a small starter battery grade lithium carbonate plant with a capacity of 3,000 tonnes per year. Guillermo Calo, Rincon’s managing director, said the plant had “started to take shape”, with an overhaul of camp facilities and the construction of an airstrip underway.

The project, which calls for additional work and engineering studies aimed at moving towards full operations, is expected to see saleable production start in the first half of 2024, Rio Tinto said.

Juan Turner, director and owner of Argentina-based project cargo forwarder Rowners, has been keeping his eye on the sector for the last 15 years. “Our reserves are huge, and a lot of carmakers are trying to make deals or even own some reserves. I see so much potential."

Rowners, a member of the Heavy Lift Group, has represented Danish-forwarder Martin Bencher – now part of Maersk – since the Argentine company was founded in 2015, handling mostly 300-tonne generators and other heavy components for local and international power producers.


SUPPORT FOR LOCALIZATION

Turner, whose great, great-grandfather began his own logistics firm in 1878, points to an infrastructure drive to support the mining sector, which includes efforts to upgrade the country’s train network to transport raw materials and other cargo.

Mining companies are also establishing transfer yards for trucks taking cargo to and from lithium mines, which are often located 4,000 metres above sea-level.

“The logical way to transport cargo is to contract normal trucks to go up to these transfer yards, then use the more powerful trucks and experienced drivers to climb the mountain. This solution works for either raw materials or project cargo.”

The executive said having local presence – “local” meaning from the same province – in Argentina was “crucial”. “Always we give priority to someone from the same province. There is a lot of social pressure on this. I have heard many cases whereby the mining companies chose somebody from another province or from abroad and they had a lot of trouble. They had to change their mind and choose the local supplier. This is for sure a trend,” he said.

Rodrigo Izquierdo, deputy CEO and domestic cargo director of Integral Chile, also stresses the importance of maintaining a local presence. “The mining companies really notice that we have presence, that we invest and we are closer to them. It helps a lot with the company’s image, and it is far easier to react and to do something.”

Chile is the lithium triangle’s most developed market, and second only to Australia in terms of global production. The government has limited output to just two companies – Chile’s SQM and US-based Albemarle, with operations centred around the Atacama salt flats.

Several players in the junior mining sector are also engaged in development and exploration.

Izquierdo says the sector has been a significant source of logistics work for Santiago-based Integral. The firm has launched an office in the northern port city of Antofagasta to serve mining operations.

Izquierdo points to a large network of contractors that supply heavy machinery, vehicles and other components to mining companies. “With the huge number of suppliers, there is enormous potential for different kinds of projects. And we are working hard to get as many as we can,” he said.

“We recently delivered a series of modular offices scheduled in two lots from Santiago to La Negra – an important industrial area near Antofagasta. Chile’s highways are very good – pretty straightforward and well-suited to transport this sort of oversized cargo, or even bigger. Both convoys, sent on different months, travelled 1,350 kilometres only during daylight hours to their final destination, at a safe speed, smoothly and with no incidents.”


CHILE FACES CHALLENGES

The country though faces an uphill struggle to maintain its global – and even regional – predominance, with some analysts predicting that Argentina will be producing more lithium than its neighbour by 2028.

The country’s loss of ground, analysts claim, is partly caused by the environmental and social challenges that continue to disrupt the buildout of projects.

Local communities throughout the region are becoming increasingly vociferous about the environmental impact of lithium brine mining on local water sources and biodiversity, while leftist President Gabriel Boric’s pledge to increase mining royalties and tighten rules governing metals and minerals extraction have put investors on high alert.

“It is not in the place where investors initially expected it to be in terms of lithium production by 2023,” said Carla Bass, Latin America editor at Argus Media.

“Political unrest and uncertainty – including the failed attempt to pass a new constitution – as well as less-attractive investment terms have hindered development. Argentina in turn has taken one of the more agile approaches in the region.”

The metal remains key for Chile’s economy, with the value of its lithium exports doubling in January from the same month last year to US$565 million – about 6 percent of total exports, according to government data.

But, Bass says, this is because global prices have doubled over the same period, as growth in EVs and similar uses for lithium accelerate. “Prices have risen, but Chile’s volumes are roughly flat,” she said.


BOLIVIA'S AMBITIONS

Bolivia, the third member of the lithium triangle, has more lithium deposits than any other country – 21 million tonnes, according to the US Geological Survey – with most buried beneath the vast Salar de Uyuni salt flats in the southern department of Potosi. But, unlike Argentina and Chile, these resources remain largely untapped.

President Luis Arce, who took office in late 2020, has been quoted as saying that he wants Bolivia to become “the world capital of lithium”, and that the landlocked nation could meet 40 percent of global demand by the end of the decade.

Previous administrations have also touted plans to industrialize the Salar de Uyuni, pointing to the potential of lithium hydroxide, EV batteries and industrial cathode materials.

Earlier this year, state-run lithium company, Yacimientos de Litio Bolivianos, or YLB, inked a deal with a consortium led by Chinese EV battery maker CATL to invest more than US$1 billion to mine, refine and market Bolivia’s massive resources.

Whether the deal marks the start of an “era of industrialization of Bolivian lithium”, as Arce said, is moot, with similar efforts in the past to lure foreign investment and expertise falling flat.

“Bolivia’s state-first policies have yet to lead to any real development. It certainly has the reserves to become the world capital of lithium, but it may not have the political will or the infrastructure,” Bass said.

“That Bolivia could go from mostly pilot projects to supplying 40 percent of global output by 2030 as the president has outlined would require a major and completely coordinated infusion of investment. That is not happening now. There are also environmental and social concerns with altering the salares, which could grow.”

Porrua, who lived in Bolivia for more than two years while serving as Altius’s project director for the Americas, also believes the country is failing to keep pace with its neighbours.

“I really love Bolivia, and they have tremendous potential, not only for lithium but for a lot of industries,” he said. “But I am afraid they are not going to be first in line. It is Argentina where we are seeing the most interest to develop, and they are growing faster than any other country.”

MAIN PHOTO: Rio Tinto's Rincon lithium project Argentina. CREDIT: Rio Tinto