President Alberto Fernández said that the use of natural resources will play a central role in the economic policy of the Government. "Vaca Muerta and mining are going to be paramount," he promised at lunch with the most important businessmen in the country, based on the Argentine Business Association (AEA).
However, he assured that the focus will be on adding value and not on export of raw materials. For that, he used lithium as an example: "We have to make the effort to build, for example, a battery company so that we stop selling it as raw material and start marketing it as an elaborated product."
Likewise, the current Minister of Productive Development, Matías Kulfas, refers to the fact that in the different productive sectors there must be a "value chain look".
One of the most active technicians in the economic plan assembly assigns this mineral a marked role. This is Diego Roger, an expert in renewable energy and industrial development and who was in charge of the industrial policy coordination of the plan for the first 100 days of government that the PJ put together for Alberto F.
The obsession of the new Government is the generation of dollars to face the debt. That is why, before each meeting with the productive sectors, the economic team focuses on exports. In this regard, there are plenty of reasons to pay attention to lithium:
- Sales to the world could increase by about 230% in less than two years, to US $ 1,120 million, according to estimates from the Rosario Stock Exchange
- In terms of activity, export revenues quadrupled between 2010 and 2017, as a result of the price increase and the quantities exported
The strong demand is due to the fact that it is a key input not only for the manufacture of cell phone batteries and computers, but is also required for electric vehicles and in the field of renewable energy.
These numbers, so positive, also realize the enormous potential. Argentina exports lithium carbonate and lithium chloride, two primary products, with no added value. That is why from the Government they talk about the need to take advantage of this natural resource, but from a productive process that provides added value.
"Industrialization means transforming raw materials into products with greater added value and, in this case, batteries," says engineer Iván Aranda, a specialist in the sector and in energy storage.
In the region, Argentina, together with Bolivia and Chile, account for almost 85% of world reserves. That is why, if progressing along this path, a multi-million dollar industry could develop several times.
According to market sources, a development plan for lithium activity in Argentina would imply:
- The installation of 26 enterprises
- Disbursements for US $ 15,000 million
- The generation of 180,000 direct posts
- Obtaining a cumulative net return of US $ 28,000 million for the period 2020-2030
Such projection is based on the massive take-off of renewable energies and that 10% of storage needs be covered with lithium batteries in Latin America.
"From this approach, an industry is developed that incorporates technology and knowledge, generates numerous sources of employment and meets a basic need: access to energy," says Aranda
The lithium members?
In Argentina there are more researchers who study in depth the phenomenon of lithium than projects launched to make a profit. Currently, there are about 150 scientists dedicated to researching this mineral.
Many of them are in Innova-T, the innovation area of Conicet, which seeks to link the academic and productive sectors. This 2020 will have as strategic axis the energy transition.
There are two operational mines in the country, one in Jujuy and another in Catamarca. While there are some other initiatives, the truth is that they are in the development stage.
Meanwhile, there are five ventures in process feasibility test, five in advanced exploration and another five in the previous economic evaluation phase.
The exploitation works are concentrated in the Puna, distributed in salt flats located in Salta, Jujuy and Catamarca. Currently, two projects generate concrete production: Olaroz, in Jujuy (at a rate of 17,500 tons), and Salar del Muerto Muerto, in Catamarca (22,000 tons).
The first is under the control of a company formed by the Australian mining company Orocobre and the automaker Toyota. The second is owned by the American FMC. Between the two, extraction represents 16% of world production and contribute to Argentina occupying third place in the ranking of producing countries in the world.
Gustavo Koch, director of the Argentine Chamber of Mining Entrepreneurs (CAEM) argues that the takeoff will be accentuated over the next five years. Energy Group and Jiangxi Ganfeng Lithium (GFL) are some of the companies that want to take control over the ore in Jujuy.
Along with these initiatives, Koch argues that currently there are also explorations in four other areas of Salta and one in Catamarca.
Facundo Huidobro, head of the Salta Mining Chamber, agrees on the good perspective of the sector: "We have Chinese, Korean, Canadian capitals. The demand will be growing," he tells iProUP.
Looking ahead to 2020 and 2021, two projects now under construction stand out: one of them refers to the first lithium battery factory in the country and is commanded by the Italian Seri (40% stake) and the state company Jemse (60% ). The investment is around US $ 60 million.
Is it possible to advance in industrialization? "Of course," says Federico Nacif, sociologist and researcher at Innova-T del Conicet and author of the book "ABC of South American Lithium." He considers that it is possible among other reasons because a bordering country, Bolivia, advanced in its industrialization.
"In Chile and Argentina, the mineral has been exploited 20 years ago and raw raw material is exported," he says. The proposal of its research team covers two dimensions: one related to primary exploitation and the other with industrialization.
- First, to recover sovereignty over the reserves of this material and create a National Lithium Commission composed of representatives from different sectors
- Second, to process the raw material and move forward in a plan that includes national industry and technology
For this, he thinks that an Argentine company should move forward. "A public company, such as YPF Technology or Invap, would take advantage of the large amount of research the country has and take on the challenge of industrializing lithium," he explains.
Batteries made with this resource could be produced for various applications. "The most interesting thing for Argentina, and what is most within our reach, is the production of those destined for electric transport or renewable energy," he says.
However, there is an inconvenience to move forward: the Argentine law. "The mining code does not allow this resource to be declared strategic, as is the case anywhere in the world," says Nacif. That is, a first step in any plan should be to change the norm.
Current legislation indicates that whoever finds a site can exploit it. In addition, in the '90s it was established that the provinces have the domain of resources. "The regulatory framework was made at the service of large companies," he notes.
For his part, physicist Walter Legnani, warns about the consequences of the Government not moving forward with any strategic plan. "We are being the members of lithium", graph, to refer to the little added value in the chain.
Legnani belongs more than a decade ago to the group "Autoconvocados por el lithio", a team that raises the importance of added value for the country's economic development.
The estimates they work with are shocking. "For every dollar we export, we import $ 100 in battery costs for technological devices," he explains, about the impact it would have on the trade balance.
But, in addition, it affirms that the opportunity cost is enormous. "We extract lithium carbonate at $ 10,000 per ton. That could be multiplied by 8 if the batteries are produced," he remarks. As with the export of any commodity, countries are tied to the fluctuations of international prices.
Legnani is optimistic. He considers that Argentina has two key factors: one, of course, the natural resource, and another, the "gray matter" of the scientific advances of the researchers. The physicist reveals that from the Autoconvocados group they were contacted by experts from Italy and Germany to invest in the country. "In Europe they don't have the mineral," he explains.
On investments, he points out that 100 million euros are needed for a medium-sized factory. "It is not such a large investment for a group of investors. And, in addition, we can show academic support," he remarks.
"A plant could be put in a year, since they are much shorter periods than any hydrocarbon venture," he concludes.