Despite the growing demand for lithium, political instability in Chile, which holds one of the world’s largest deposits, threatens the viable mining of its reserves.
Following the Chilean government’s move to withdraw Soc Quimica & Minera de Chile’s (SQM) license to exploit the nation’s vast deposits, the company chose to invest in a lithium project in neighbouring Argentina, according to a report by the Australian Financial Review.
SQM is also trying to prevent a lithium project expansion by US company Albemarle in Chile.
Chile contained 54 per cent of known lithium reserves in the world as of 2015, with lithium brines in salt flats of its Atacama Desert. However Argentina – also a hotspot for lithium brines – is acting faster to capitalise on the growing demand, with president Mauricio Marci removing capital and currency controls as well as a mineral export tax to increase investment.
The production hiccups in Chile could lead to Argentina becoming a major lithium producer.
And Australia has already begun to reap the rewards from Argentina’s resources.
The Olaroz lithium facility in Argentina, a joint venture between Australian company Orocobre and Toyota Tsusho Corporation, was the first new lithium brine built in twenty years. Within the last six months, its share price increased by 133 per cent.
Consultancy firm Stormcorw Capital indicated that Chile produced approximately 35 per cent of the world’s lithium output in 2015.
Jon Hykawy, Stormcrow’s president, said, “The market is growing, but supply isn’t going to stand still and wait for SQM and the Chilean government to iron out their differences.”