"Lithium will definitely replace biofuels"
In the north of Argentina, the rush for the "white gold" is picking up speed
Karl HoffmannMay 9, 2025
In Argentina's remote northern province of Salta, the silence of the desert landscape is only broken by the hum of machines pumping salt water to produce lithium - a sign of increasing efforts to capitalize on the global electric vehicle boom. Under the highland salt flats of the South American country, which can be reached via winding mountain roads, lies the world's third largest reserve of ultra-light battery metal, the price of which soared last year due to the global trend towards more environmentally friendly means of transport. Argentina is already the fourth largest lithium producer in the world, and the Argentine government and local authorities are now trying to accelerate the development that has been hampered for years by bureaucratic hurdles, high tax rates, rampant inflation and exchange controls. Provinces like Salta are building regional logistical hubs and access roads, lowering tax rates and streamlining confusing regulations for the sector to attract investment in the "white gold". This has resulted in a spate of new activities, businesses and plans to ramp up production that could make Argentina a major player in the electric vehicle supply chain in the coming years as demand from automakers and buyers such as China is expected to increase. "Argentina could become the world's leading producer of brine in less than a decade if the flow of projects continues," David Guerrero Alvarado, an advisor to Canadian company Alpha Lithium, told Reuters in Salta. Alpha Lithium is currently reviewing a project in nearby Salar Tolillar, one of many projects that are still in the early stages and, while promising, will take an often long and costly process to turn into reality. As countries around the world strive to reduce their emissions, increasing global demand for lithium and rising prices have increased interest in what is known as the lithium triangle, "which spans parts of Argentina, Bolivia and Chile. In Argentina, mining provinces such as Salta, Jujuy and Catamarca have taken steps to encourage cautious investors by signing an agreement in June to establish uniform rules and "strengthen infrastructure, legal certainty and fiscal stability". Salta's minister of mines and energy, Flavia Royon, told Reuters that the province could produce 200,000 tons of lithium carbonate equivalent annually by 2025 after going through a list of upcoming lithium developments. That would be a huge increase and correspond to about a fifth of the forecast world production this year. "There is interest in Salta, the Argentine province with the largest number of lithium projects in the pipeline," she said. The Argentine Mining Chamber CAEM estimates that national production will decrease from an estimated 38,800 tons this year to 175,000 tons by 2025. Since lithium projects often take years to get up and running, this remains an ambitious goal. The Argentine center-left government has made a conscious and strategic move towards lithium. Last year it cut taxes on all mining exports from 12% to 8% and in April relaxed capital controls for companies bringing foreign currency out of the country for projects with an investment of over USD 100 million. She has supported the state-owned energy company YPF in setting up a lithium battery factory and is promoting a bill to lower taxes on electric cars. "We will focus on areas and fuels of the future that do not produce environmentally harmful emissions, which are essentially hydrogen and lithium batteries," said Minister of Production Matias Kulfas at a recent meeting with reporters in Buenos Aires. A source at the central bank anxious to replenish troubled foreign exchange reserves said the country has seen growing interest from investors in mining, including lithium. The Australian company Orocobre (OTC: OROCF) Ltd. and US mining company Livent (NYSE: LTHM) Corp., the supply agreements with Toyota Corp. and BMW, respectively, operate the two producing lithium projects in Argentina out of a total of over 60 proposed projects in various stages of development. Other companies in the country include Australian companies Argosy Minerals, Lake Resources and Greenwing Resources, and South Korean companies Posco and Neo Lithium Corp, which are backed by the Chinese CATL. The Chinese Ganfeng Lithium Co Ltd. is in a bidding war to buy Argentina's Millennial Lithium Corp. after an undisclosed battery maker submitted a competing bid on its $ 280 million bid. Ganfeng and Lithium Americas (NYSE: LAC) plan to produce approximately 40,000 tons of lithium carbonate equivalent at the Cauchari-Olaroz mine, with production scheduled to begin in 2022. However, doubts remain as to whether Argentina can increase its lithium production as it has promised. Half a decade ago, under a pro-business government, the country had expressed its ambition to overtake the larger producer Chile, but it did not succeed. "Argentina has the resources, but turning them into reserves and projects requires a set of clear and stable rules," said Natacha Izquierdo, an analyst at Abeceb, a consultancy in Buenos Aires. Alejandro Moro, managing director of Rincon Lithium, an Australian company holding a concession in the Rincon salt flats in Salta, agreed that there were still hurdles to raising capital. "This is a country with a rather unstable macro-economy and high taxes on the capital that wants to invest here," he said. The company operates a pilot plant on the plains, nearly 4,000 meters above sea level. It pumps brine through pipes 30 meters underground, which is then processed into lithium carbonate. Rincon hopes to extract 50,000 tons per year by 2025. However, despite his reservations, Moro said he had become more optimistic about Argentine support for mining investments after meeting senior officials a few weeks earlier. Argentina, an agricultural powerhouse abundant in oilseeds, has focused its energy subsidies on biofuels for years, but authorities are now signaling a shift in priorities to electric vehicles - and lithium. "Lithium will definitely replace biofuels," said Moro.
