Lithium and mining SMEs: what it takes to multiply production by 10

For SMEs to grow, it is important to give them production volume in their intervention in the value chain in different areas of the economy. Argentina has in three key sectors of the economy, such as the countryside, the automotive industry and the knowledge economy services, an important export flow that generates foreign currency with a large participation of SMEs .

One of the sectors that still has enormous potential in Argentina is the mining sector, which this government, through the management of the minister Sergio Massa and the Secretary of Energy, Flavia Royontry to project themselves into the future.

The big mineral star in Argentina today is lithium, which will play a fundamental role in the transition to clean energy matrices, replacing fossil fuels. Argentina has 21% of the world’s lithium reserves and concentrates, with Chile and Bolivia, 67% of the planet’s reserves.

According to data from Abeceb, the mining sector has had more than 1,200 SMEs dedicated to the exploitation of non-metallic minerals, application rocks and semi-precious stones.

Growth potential depends on several factors, including:

1- Access to financing at competitive rates.

2- Availability of credit access guarantees.

3- Develop an investment and non-commercial bank like the current one that can assess and understand the specificities of the sector.

4- Labor costs.

5- Market development (research and development).

6- Logistics costs. Multimodal transportation design.

If we take a copper mining project as a parameter, the participation of SMEs is enormous and their level of density and growth also allows them to jump with their development towards other sectors of the economy thanks to the experience and work developed in the mining sector.

Exploration, mining, technical services, milling, flotation, tailings and dam, as well as operations and administrative support services, require the participation of SMEs belonging to nearly 100 sub-sectors of our economy with the impact on production and employment that this implies. .

In the 1990s, the United States was the largest producer of lithium, unlike today, accounting for more than a third of global lithium production in 1995. From then until 2010, Chile became the largest producer with a production boom in the Salar de Atacama, one of the richest lithium brine deposits in the world .

Global lithium production exceeded 100,000 tons for the first time in 2021, quadrupling since 2010. In addition, approximately 90% came from only three countries. Argentina has enormous potential, although it still needs to establish solid legislative bases and predictability for investments in the sector.

The Catamarca lithium deposit alone covers part 35,000 hectares making it one of the largest and richest lithium brine deposits in the world. In turn, in this same province is one of the great promises of metal extraction in the country, the MARA project, for copper, molybdenum, gold and silver, which is at a stage advanced exploration. Catamarca was the only province where copper was produced for 20 years, at the Bajo de la Alumbrera mine, and now it’s about to do so again.

Now, the MARA project plans to integrate the Agua Rica deposit with the infrastructure that remained of Alumbrera, which ended production in 2018. This integration would reduce the company’s environmental footprint by a percentage important and would revive an infrastructure that is currently under care and maintenance. Only in the case of this project that exceeds the production of lithium, an investment of more than 3,000 million dollars and more than 1,500 million dollars in annual exports are estimated today for at least 28 years.

Only with this project, one of the 25 most important in the world, Argentina would again be part of the world table of copper, the so-called green mineral due to its extreme need for the energy transition. And like MARA, several copper projects could be developed in our country during this decade.

According to the Department of Energy, it has a potential investment in lithium mining operations of $6,473 million. The production horizon is 373.5 thousand tons in addition to the current capacity of 37.5 thousand tons per year.

Lithium demand today is focused on rechargeable batteries. In 2010, ceramics and glass accounted for the majority of lithium consumption with 31% of the total. In ceramics and glassware, lithium carbonate increases strength and reduces thermal expansion, which is often essential for modern glass-ceramic cooktops. Lithium is also used to make lubricating greases for the transportation, steel, and aviation industries, as well as other lesser-known uses. Continuous casting concerns a metallurgical process which makes it possible to continuously control the transformation of liquid metal at high temperature into solid to obtain semi-finished products, such as wires, cylinders, tubes, rectangular profiles, special profiles.

As the world produces more batteries and electric vehicles, lithium demand is expected to reach 1.5 million tonnes of lithium carbonate equivalent (LCE) by 2025 and over 3 million tonnes by 2030.

To achieve the development of the mining sector in general, there is still a lot of work and public policy to be done to generate the necessary incentives to move forward on this path. With the same shared mountain range, in 2021 Chile exported $58.7 billion. In the case of Peru, it was $29.1 billion and Australia $318 billion, slightly less than Argentina’s external debt. However, that same year, our country exported minerals for only 3.3 billion dollars, which is 9 times less than Peru; 18 times less than Chile and 97 times less than Australia. However, we are still debating how and when.

In 2021, mining activity brought in USD 100,000 million to the state. It is the second largest contributor of foreign currency along with agriculture and technology. According to data from Abeceb, Argentina is the second largest lithium reserves in the world and the fourth largest international producer, it has the potential to be among the top 10 copper producers. In the case of gold in 2021, it was the top mining export. Two of the 25 largest mines in the world are in Argentina. In the case of silver, it is the tenth producer in the world.

Since the inauguration of Massa, the sector is expected to triple its exports to reach $12,000 million over the next 10 years with a potential investment of $20,000 million. Today, in our entire country, there are only 13 fields in production, 18 under construction and 95 under construction and in advanced exploration. SMEs are waiting.

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