Lithium Lands: Argentina’s Race for White Gold
Timothee Gros | 14 February 2025
Summary
Lithium emerges as an essential resource for green transition due to its central role in battery-making, especially for electric vehicles.
Argentina holds 20% of global lithium reserves and with global demand expected to increase fortyfold by 2040, Argentina is poised to gain significant strategic advantages whilst simultaneously strengthening their economic recovery.
Further projects, such as exploration and infrastructure building, are likely to generate unrest among local indigenous communities who oppose the continued extraction on environmental grounds.
Lithium as a lightweight metal with high energy storage potential, it has emerged as a crucial resource in the context of a carbon-free transition. It is particularly prevalent within the electric vehicle industry, prolonging their battery life significantly. With transport representing over a quarter of global CO2 emissions, the number of electric vehicles on the road needs to increase dramatically to stay below the 1.5C threshold. As a result, lithium is set to become a theatre of international competition.
Argentina currently holds 20% of global reserves at 20 million metric tonnes, with most brine deposits located in and around the tri-border area with Bolivia and Chile, also referred to as the ‘lithium triangle’. Argentina’s lithium carbonate production capacity has already tripled in the last two years. Around 85 projects are currently at various stages of development in northwestern Argentina, ranging from basic exploration to infrastructure building. Lithium mines, which had long remained untapped, are now attracting considerable foreign interest under President Javier Milei’s market-friendly policy.
Lithium, nearly doubled the investments made by US firms, supporting seven projects totalling USD 3.2 billion. Concomitantly, China was the largest importer receiving 43% of Argentine lithium exports in the same period. Along with aggressive budget cuts, revenues from lithium exports, which could reach USD 1 billion per year by 2030, could prove decisive in Argentina’s road to economic recovery, following years of inflation and mismanagement, amounting to recession as recently as 2023.
The extraction of lithium is likely to generate unrest among local indigenous communities. Concerns have already been raised in Salinas Grandes, operated by Argentine giant Litica. Around 30 different indigenous groups live in the area and depend on activities such as animal herding and salt collection for their livelihood. Lithium’s water-intensive extraction risks drying out salt flats and emptying lakes, which would force locals into migration. As a result, indigenous communities have already organised protests and road blocks leading to the mines. Overall, the risk of social unrest remains at an increased level. Such disruptions could even escalate as major firms continue to infringe on their historical territorial rights.
Any Darcacha/Flickr, CC BY 2.0
Forecast
Short-term
Argentina will almost certainly continue to facilitate the growth of the lithium industry by welcoming more foreign and local investments, opening up new mines and potentially developing partnerships with neighbours Chile and Bolivia. Local communities will more than likely attempt to challenge the expansion through various non-violent means.
Long-term
As lithium acquires increasing strategic value, global powers will almost certainly compete for privileged access to Argentine lithium. New partnership opportunities will likely strengthen Argentina’s status as a major regional actor.