https://stock head.com.au/resources/high-voltage-south-american-lithium-investment-heats-up-even-as-prices-fall/
High Voltage: South American lithium investment heats up even as prices fall
Mining 23 May 2025 Emma Davies
- Rio to invest $400m in Chilean lithium project with Codelco
- Lithium price hits lowest point since back in Feb 2021
- Woodmac predicts oversupply then deficit again in early 2030s
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium.
The global lithium market is expected to face a significant supply surplus over the next decade, with deflationary pressures from China’s overcapacity in processing and trade tensions with the U.S. threatening to reshape the market’s dynamics.
According to Wood Mackenzie, the current oversupply is projected to peak in 2027, followed by a potential shift to deficit by the early 2030s.
But big miners are playing the long game, not at all fazed by this week’s spodumene concentrate price drop to US$625/tonne – the lowest level since February 2021.
Case in point, mining giant Rio Tinto (ASX:RIO) just entered a joint venture with the world’s largest copper producer, state-owned Codelco (Corporación Nacional Del Cobre de Chile) to develop and operate a high-grade lithium project in the Salar de Maricunga in Chile.
Rio is investing $350m in initial funding and another $500m towards construction costs (if it goes ahead) and another $50m if the project achieves its aim of delivering first lithium by the end of 2030.
It follows the mining mammoth’s $10bn takeover of Allkem this year, along with its sanctioning of the US$2.5bn, 60,000tpa Rincon lithium carbonate operation in Argentina.
According to Benchmark Mineral Intelligence, Rio Tinto will be the second largest lithium producer in the world behind the pure play US stock Albemarle by 2035.
Rio is the latest and biggest gun splashing cash around South America, which has emerged as one of the world’s preferred lithium hot spots.
According to the International Energy Agency, Latin America (along with Asia) have become new centres for EV growth, with electric car sales across these regions surged by more than 60% last year.
Brazil-liant
No surprise then, that explorers and developers alike are flocking to Argentina, Chile and Brazil to nab a slice of pie as suppliers of materials for the global energy transition.
Just look at Pilbara Minerals (ASX: PLS), which picked up Latin Resources (ASX:LRS) and its Salinas project in Brazil earlier this year.
It’s a move CEO Dale Henderson said was because the asset would be cheaper to develop than anything similar in WA.
“It’s a fantastic proposition, which is frankly hard to beat globally,” he said at the AFR Mining Summit in Perth this week.
“We considered opportunities in our backyard. Brazil just stacked up on every dimension.”
With Latin off the table, that’s a positive outlook for juniors keeping the faith in lithium in the region, who are trading on far lower valuations.
CSE-listed American Salars Lithium is one example. Its Jaguaribe project in the State of Ceará could open up a new pegmatite district with high grade results from rock chip sampling of lithium-caesium-tantalum pegmatites. It also hosts mulitple lithium rock types such as lepidolite, spodumene and amblygonite as well as rare earths, tantalum, niobium and tin.
“These multi-mineral deposits enhance the economic viability of the Jaguaribe Project, with lithium oxide grades reaching up to 3.72%,” CEO Nick Horsley told Stock head.
“Geologically, Ceará’s Solonópole region, part of the Borborema Pegmatite Province, benefits from well-exposed, high-grade pegmatite swarms and a favorable structural setting, ideal for cost-effective exploration.”
“The Jaguaribe Project distinguishes itself through its large scale, high-grade lithium and multi-mineral potential, historical mining validation, logistical advantages, and strategic exploration approach, positioning it as a leading hardrock lithium project in Ceará compared to smaller or less diversified regional plays.”
With prices so low more mine shuts are a distinct possibility, Horsley says a 10-30,000t lithium carbonate surplus globally implies we only need one hard rock mine to shut to bring about a faster than expected surplus, potentially as soon as next year.
That’s informed the company’s approach to exploring early stage lithium projects that could come to life in the next upturn, with assets across Canada, Brazil, the US and Argentina, where it boasts 13880 hectares of brine-prospective salar tenure at the Pocitos project.
This month, the company appointed veteran hydrogeologist Dr Mark King as its technical advisor to help steer its search for significant lithium salar projects.
King has +30 years international experience in groundwater modelling and geochemistry, and 15 years specialising in exploration and evaluation of lithium brine projects including for Albemarle at Salar Atacama, Silver Peak and Antofalla Salar, Vulcan at its geothermal lithium projects in Germany’s Rhine Valley and Lithium Americas and the Cauchari Salar.
That makes his resource and reserve estimation experience among ‘arguably the most extensive of any geologist, hydrogeologist, or engineer in the world’, American Salars said.
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