Maybe this is the reason that lithium stocks on asx down today??
- Mar 7 2017 at 9:44 AM
- Updated Mar 7 2017 at 9:44 AM
Argentina's lithium boom is good for Tesla as country plans to flood market
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After President Mauricio Macri, pictured, removed currency and capital controls and taxes introduced by his predecessors, about 40 foreign companies began to consider opportunities in Argentina's mining industry, more than half of those in lithium, according to the country's Mining Secretary. Ricardo Mazalan
by James Attwood and Jonathan Gilbert
Argentina has some good news for Elon Musk's
Tesla, and bad news for mining producers in Chile and Australia: the country may be about to flood the market with lithium.
After President Mauricio Macri removed currency and capital controls and taxes introduced by his predecessors, about 40 foreign companies began to consider opportunities in Argentina's mining industry, more than half of those in lithium, according to Mining Secretary Daniel Meilan.
Industry heavyweights
Albemarle, Soc
Quimica y Minera de Chile SA, Eramet SA and
Jiangxi Ganfeng Lithium. are among groups looking at expanding or building new lithium operations in Argentina, as part of a $US20 billion ($26.4 billion) pipeline of mining projects through to 2025, Meilan said on Monday in an interview. China's CITIC is also looking for opportunities, according to the government.
If all of the projects go ahead, Argentina's annual output of the metal used in electric-vehicle batteries would surge to 165,000 metric tons, or about 45 per cent of global supply, according to government projections. Prices will increase as much as 15 per cent this year, Albemarle
predicted last month.
"Conservatively, Argentina will represent about half of global lithium production by 2020," Meilan, who also headed up mining under former President Carlos Menem in the 1990s, said from Toronto, where he's participating in the PDAC mining conference. "This shows us that we're starting to be well-regarded globally."
Further fuelling investor interest is a set of standardised rules for provinces that Meilan said will probably be in place by June or July. Under
an accord negotiated between the federal and provincial governments - which own the minerals in their territories - miners will be charged a royalty of as much as 3 per cent, he said. The agreement still needs congressional approval.
Interest piqued
Deregulation under Macri, who took office in December 2015, has piqued the interest of global miners like
Glencore and
Vale SA that had suspended or slowed projects in Argentina, according to the government. Rio de Janeiro-based Vale, the world's biggest iron-ore producer, will finish a feasibility study in September for a scaled-back version of the Rio Colorado potash project that it
suspended in 2013, Meilan said.
Under the accord, the government will change the tax regime to make Argentina's mining industry more competitive and improve mining-related infrastructure.
Vancouver-based
First Quantum Minerals, which is studying a copper project in Salta province, has been following developments and would like to see changes that offer better investment stability, Sharon Loung, a spokeswoman, said in a January 31 email.
Tesla has a massive need for lithium-ion batteries both for its vehicles - including the Model 3 due this year - as well as energy storage-devices. In partnership with Panasonic, Tesla is working to collapse its battery supply chain and drive down costs
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