Significant opportunity

23rd June 2023 By: Halima Frost - Senior Writer

Significant opportunity

ITS A NO BRINER The joint venture between two global lithium related companies will form the third largest lithium producer globally

Recently founded NewCo – a multibillion-dollar collaboration between US-based chemical manufacturing corporation Livent Corporation and Australia-based global lithium chemicals company Allkem – is the “largest lithium-based joint venture (JV) under way”, according to Latin America-focused strategic advisory firm Southern Pulse founder and managing partner Samuel Logan.

Situated in Argentina's Jujuy province, in the so-called Lithium Triangle region, the JV is set to create the world’s third-largest lithium producer, he adds.

Logan tells Mining Weekly that the two global lithium chemicals companies will combine their highly complementary range of assets, growth projects and operating skills across extraction and processing under a vertically integrated business model, to create NewCo, which aims to be a significant global lithium chemicals producer.

He explains that, as one of the world’s top sources of lithium, South America’s lithium triangle – between Chile, Bolivia and Argentina – represents about 55% of known global lithium reserves.

According to a report of the US Geological Survey in January this year, Bolivia holds reserves of about 21-million tons, Argentina about 19-million tons and Chile about 9.8-million tons.

Logan says the triangle “presents a tremendous amount of global production opportunities”, but a variety of political, environmental and social challenges endemic to the region could prevent exploration and production from reaching their full potential.

The Chilean government’s new Lithium Plan shares the intention with miners to employ the direct lithium extraction method – a floatation method – which is as yet unproven in the country, for new lithium projects, Logan points out.

Historically, there has also been bureaucratic red tape regarding Chile’s lithium industry because the government had declared lithium a strategic natural resource.

Meeting Demand

Current efforts to liberalise the process of controlling concessions and provide improved operational oversight represent government’s best attempts to ensure that Chile is well positioned to meet global demand.

Chile regards the lithium industry as a significant opportunity for future public revenue in much the same way that Chilean State-owned copper mining company Codelco did – significantly contributing to public coffers, Logan adds.

This contribution, in turn, generates the revenue required to make long-term public investments in infrastructure and social-impact programmes.

“With proven reserves registered at some of the highest in the world, international players continue to line up to submit projects and meet with Ministers, governors and other regulators in the region,” he says.

The next few years will play a critical role in South America’s stake in the global mining industry as it grows beyond a resource for precious metals into one of the most important global supplies for critical minerals.

“Although there are visible challenges, the lithium triangle is a fruitful industry that all stakeholders should keep a close eye on,” he concludes.