Lithium in Latin America New Technology New Policy New Deals

July 2023
Intelligence Series | Mining & Metals
Lithium in Latin America:

New Technology, New
Policy, New Deals
Lithium demand is growing rapidly, driving prices and prompting a

race to start up new mine capacity while the market is hot. This report
evaluates new extraction technology for brine deposits, changing lithium
policy in Chile and new deals and players across the region.
Lithium in Latin America: New Technology, New Policy, New Deals
Index Introduction 3
Graph: Lithium Supply-Demand Forecast
Graph: Global EV Market Share
Graph: Global Lithium Production
Graph: Global Lithium Reserves, Resources
Chile: Enter the State 6

Graph: Chile Lithium Production
Argentina on the Rise 12

Graph: Argentina Lithium Exports
Technology Changing the Brine Game 17

Table: DLE Projects in Latin America
Mexico: Uncertainty Stalling Projects 20
Brazil: Nurturing the Potential 24
Bolivia: DLE and New Partners 26
Conclusion 27
Discover more READ THE REPORTS
Mining Survey 2021: High Alert as Political Risk

Takes Center Stage
Copper in Latin America: The Only Way Is Up
2
Mining Capex 2021
Introduction
The global lithium market may be at a new crossroads. On the one hand,
demand is rising rapidly, along with prices, as electromobility gathers
pace. According to Chilean state copper commission Cochilco, lithium
demand is growing at 10% a year.
Indeed, the share of global new sales represented by battery electric and
plug-in hybrid vehicles is expected to rise from 17% in 2023 to 55% in
2035, Cochilco reported recently.
On the other hand, market watchers are already looking ahead to a not-
so-distant future in which secondary lithium supply gains importance,
new mine production is less critical and prices plateau.
In the middle, new lithium production technology is about to boost
the economics of a swath of low-grade brine projects, while also
improving the environmental profile of all brine projects that adopt it and
potentially changing the permitting game, further speeding the delivery
of new supply.
In this context, there is a race to bring on new production, and Australia
has been in the lead – at least in terms of mined lithium, if not lithium
chemicals – despite Latin America’s larger reserves.
Chile, which holds the world’s biggest reserves, is up against the
uncertainty of the implementation of a new state lithium strategy, while
emerging projects in Canada and the US face the challenge of finding a
trained workforce and some regulatory issues.
Sal de Vida. Credit: Allkem
3
In Latin America, Argentina offers the most promise for near-term

production growth, despite its macroeconomic woes and the fiscal
restrictions that have crimped foreign investment. The country has built
up a strong pipeline of brine projects and, little by little, cultivated a track
record of successful permitting and project deployment.
Brazil has entered the game with a successful hard rock project and
proactive government support to attract investors. Investment has been
very slow to materialize in Bolivia, a country long recognized for its
massive, lithium-bearing salt flats, but recent new deals with Chinese and
Russian firms aim to kickstart production. Mexico, meanwhile, was hot
on the scene a few years ago, but state intervention has largely stalled
the industry. Peru hosts one significant project, due to present an initial
environmental study this year.
This report delves into the lithium investment climate and latest project
advances around Latin America and analyzes the potential impact of the
advent of direct extraction methods on the region’s brine resources.
Cover photo: Drilling at Kachi project, Argentina. Credit: Lake Resources
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5
Chile: Enter
the State
In April, Chilean President Gabriel Boric announced in a new national
lithium strategy that will favor the generation of public-private
partnerships for the production and industrialization of the white metal
in the country.
The new line drawn for lithium has been, for the most part, well
received, as it ends a period of uncertainty and opens the door for
the private sector, which until now has been largely excluded due to
lithium’s status as a strategic mineral. Only the few operators who held
concessions prior to its designation as strategic more than 40 years
ago have been authorized to produce and sell the mineral, despite
significant interest from investors as it has become clear over the last
decade that lithium demand is set for major growth.
6
As part of the new strategy, state-owned copper miner Codelco will be

responsible for negotiating the extension of the contracts held by the
two companies currently producing lithium in Chile, SQM and Albemarle,
whose terms expire in 2030 and 2043, respectively.
The government has ensured that the contractual conditions of these
companies will be respected until their end, but before the date comes
the companies will have to adjust the conditions with state copper
miner Codelco for the entry of a majority state participation. The two
companies operate in the Salar de Atacama salt flat, which, with its
high concentrations of lithium along 2,800km2 between the Andes and
Domeyko mountain ranges in Antofagasta Region, is considered strategic
for the country.
In a previous attempt to open Chile’s lithium to private investment,
lawmakers several years ago created a system (with limited success) of
lithium exploration and production contracts known as CEOLs, which
are granted by the mining ministry and managed by the state investment
promotion agency Corfo, owner of the mining properties in the Salar
de Atacama. The new strategy maintains the CEOL regime for Atacama
lithium properties; for other salt flats and aquifer deposits, tenders will
take place.
Clearly, the potential is huge: even without the entry of any new players
in recent years, state income from mining titles in the Salar de Atacama
increased in 2022 on an annual basis by 503% due to the growth in
collection by Corfo and the underlying increase in lithium sales by SQM
and Albemarle, and in accordance with the provisions of their current
production contracts, according to the public finance report prepared by
the government budget office (Dipres). For this year, rents are expected
to grow by another 68%.
Albemarle and SQM have been investing in expansions, and production
is expected to continue growing in the short term as additional
expansions and new extraction projects start up. According to state
copper commission Cochilco, Chilean lithium carbonate equivalent (LCE)
production rose by more than 80,000t in 2022, reaching 268,000t,
and annual output will grow another 100,000t over the next 2-3 years
considering current projects.
The US Geological Survey puts Chile’s contained lithium metal
production at 39,000t in 2022 – second place globally – and says the
country holds 9.3Mt of reserves and another 11Mt of resources, making
the nation a crucial ally for the global energy transition.
7
At least 46 companies from 12 different countries, including Australia,

Canada, China, France, Germany, Japan, Korea and the US, have met
with local foreign investment promotion agency InvestChile to express
interest in entering the Chilean lithium value chain, the agency’s director,
Karla Flores, said in May during a “Gobierno Informa” state news
segment covering the new national lithium strategy.
“For foreign investors, the announcement of the national lithium strategy
is good news; not only does it provide an initial framework for those who
are interested in participating in the sector, but today they know that the
state has a navigation chart to advance in this matter, and that private
companies will play a relevant role in the development of the sector,” said
Flores.
Credit: CleanTech Lithium
In this line, the strategy points to the formation of joint ventures

between the private and public sectors with the mission of increasing
production sustainably, with canons of environmental responsibility and
dialogue with communities. The use of direct lithium extraction (DLE)
technologies, as opposed to the evaporation ponds currently used, will
be required to reduce the water footprint and shorten the extraction
periods. Some say this change would also serve to avoid wasting time
in capturing the opportunities around growing lithium demand due to
electromobility.
“Essentially, the policy sets to move toward a more public-private model,
with the government expecting to start conversations with operators
this half and hosting talks with local and Indigenous communities in the
Atacama salt flat early on in the process,” analysts at Goldman Sachs said
in a note published in April.
8
“If things are done right, the country could move towards the
consolidation of sustainable lithium mining,” says Víctor Pérez,
businessman, academic, green mining leader at the think tank
Corporación Alta Ley and former long-time director of Codelco.
However, there are criticisms related to Codelco’s leadership capacity
to manage lithium-related endeavours, since its experience has been
dedicated exclusively to copper extraction, says Sergio Jarpa, president
of the mining professionals’ association Voces Mineras.
In addition, there is still a lack of clarity on how the strategy will be
executed, according to Walter Muñoz, political committee president of
mining chamber Cámara Minera de Chile.
While the new policy does not imply a categorical nationalization,
which had been considered among investors to be a risk under the
Boric government, there have been no actual regulatory changes so far
and there remains a lack of specifications regarding business models,
the form that state participation will take and which projects will be
considered strategic.
There is also uncertainty around a possible legislative process to create
a national lithium company, whose management and investment will be
overseen by Cochilco, but which, according to experts, could be delayed
given the lack of government support in congress. Also, the greater role
of the state could lead to greater bureaucracy, which runs contrary to the
streamlining of procedures that would help launch the industry.
Another risk is a lack of financing from the state companies Codelco
and Enami, which will have to build joint ventures in the short term
through subsidiaries, but which have both reported lower profits in the
last year.
“Enami announced that they are willing to make partnerships, but they
don’t have money. Therefore, whoever is a partner will have to contribute
money for exploration, investment, as well as knowledge, while the state
company keeps 51%,” said Jaime Alee, president of consultancy ESK
Market Intelligence, at a seminar to discuss the new strategy.
Players in the space remain hopeful. “The product, the geology and the
reservoirs are all so great. They’re tier 1 lithium assets from a global
perspective,” says Amanda Hall, CEO of Canada’s Summit NanoTech,
which is piloting its DLE technology in the country. “One of the
challenges is to be navigating a space that is changing politically, which
gives a little more uncertainty about the future. Although this doesn’t
stop us from wanting to work here and bring our investment into Chile.”
9
Key Projects in Chile

Of a total of 53 mining projects in Chile with combined potential
investment of US$73.7 billion for the 2022-2031 period, only four are
lithium-focused, with capex of US$2.31 million, according to data from
Cochilco. Once in operation, they could contribute around 225,700t of
lithium carbonate and 17,100t hydroxide.
This pipeline includes the expansion of SQM’s Carmen lithium carbonate
plant to 180,000t/y, in Antofagasta region, which was completed at the
end of 2022. The investment of US$450 million lifted lithium carbonate
production by 110,000t/y.
A further project is also underway at SQM to increase overall capacity
and optimize the Carmen plant. The investment of US$987 million
aims to increase the capacity of existing plants from 180,000t/y to
210,000t/y lithium carbonate and from 30,000t/y to 40,000t/y lithium
hydroxide, and build a new plant with the capacity to produce 60,000t/y
of technical-grade carbonate and battery-grade hydroxide. Construction
is underway and start-up is estimated for 2024.
Operations in the Salar de Atacama. Credit: SQM
The Sales Maricunga project, operated by SIMCO, involves an investment

of US$350 million to process brines from the north-eastern sector of
the Maricunga salt flat using the solar evaporation method and produce
5,700t/y of lithium carbonate, 9,100 t/y of hydroxide of lithium and
38,900t/y of potassium chloride as a by-product, as described in the
environmental impact study submitted to the environmental assessment
service in 2018.
It had targeted a start-up date of 2024, but the company is currently in
an indigenous consultation process, as requested by the environmental
authorities, and in talks with Codelco and the mining ministry to clarify
a situation related to mining properties in Maricunga, located in the
Atacama region.
10
The Blanco project, held by the company Minera Salar Blanco, will
require an estimated investment of US$527 million and aims to achieve a
production capacity of 20,000t/y of lithium carbonate and 58,000 t/y of
potassium chloride from the Salar de Maricunga. Initially, it had planned
to start up in 2024, but now development depends on the concretion
of an agreement with Codelco and, as with the SIMCO project, it is
vulnerable to the decision of the state regarding the national lithium
company.
In addition to the four investments in lithium reported by Cochilco,
SQM has Salar Futuro in the pipeline, which involves an investment of
more than US$1.5 billion to incorporate technologies that increase yield
through sustainable production practices with a low carbon footprint and
low water consumption achieved with advanced evaporation techniques
and potentially direct extraction technology. The use of seawater will be
considered in this project, SQM said in its 2022 annual report.
Regarding lithium mining exploration, Codelco has invested US$15
million since last year to collect hydrogeological information from the
Maricunga salt flat and evaluate existing brine resources. Its drilling
campaign made it possible to verify that this is the second-best salt flat
in Chile in terms of lithium concentration, after the Atacama salt flat.
UK-listed CleanTech Lithium owns three exploration projects in the
northern Atacama region: Laguna Verde (scoping study completed in
December 2022) and Francisco (maiden resource estimate completed in
2022), with total resources exceeding 2Mt of LCE, as well as the earlier
stage Llamara. A handful other exploration-stage projects are active
in Chile, held by Minera Kairos, Durus Copper, Lithium Chile, Virtud
Minerals, Wealth Minerals and local entrepreneur Miguel Ángel Pérez
Vargas.
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Argentina on the Rise

Given the growing global demand and uncertainties in Chile, Argentina is
in the crosshairs of many. Two mining operations – Fénix, in the province
of Catamarca, and Olaroz, in Jujuy – place Argentina as the fourth
biggest global producer, with an installed capacity of 37,500t/y of lithium
carbonate, according to data from the economy ministry.
In February 2023, Argentina’s mining secretary outlined 16 advanced
projects with investment estimates totaling US$7.6 billion. Combined
resources and reserves amount to more than 106Mt LCE, with potential
production of 291,000t/y LCE. Six of the projects are categorized as
construction stage (including Cauchari-Olaroz, which announced the
start of production in June), two have feasibility studies, three have
prefeasibility studies and five have PEAs. The office identified a further
20 projects at the advanced exploration stage.
Argentina aspires to surpass China in lithium production and be one of
the top three world producers, along with Australia and Chile.
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Indeed, interest abounds among foreign investors despite the country’s

macroeconomic challenges and the upcoming presidential election in
October, as well as currency controls and a volatile exchange rate.
Even Albemarle is moving into Argentina, announcing plans in April to
invest US$47 million in exploration in Catamarca’s Salar de Antofalla,
and US$500 million more pending positive results. The company has
obtained permits to drill some 15,000m over 14 months.
The rush to produce lithium is also inspiring large-scale M&A: In
May, Allkem and Livent, both of which have assets in Argentina,
announced a US$10.6 billion plan to merge, forming what could become
the third biggest global lithium player after Albemarle and SQM. Allkem,
in turn, was formed by the 2021 merger of Australians Orocobre and
Galaxy.
The promise of investment has led to a “political willingness of provincial
governors to facilitate the entry of investments and the stability and
predictability offered by mining regulations,” according to Marina Pera, an
associate analyst at consulting firm Control Risks.
Australia’s Lake Resources, which operates the Kachi project, said in
a recent investor presentation that “Argentina is an attractive place
for lithium investment on a global scale, not only because of its vast
resource, but also because of its supportive legal and regulatory
environment.”
Argentina has taken deliberate steps to try to make investment
conditions friendlier. While the country’s 1993 mining law No. 24,196
provides for 30-year tax stability and other fiscal benefits, other factors
such as currency controls were addressed with a 2021 decree to
promote investment targeting exports, which allows companies planning
projects with capex of at least US$100 million to keep up to 20% of the
foreign currency obtained from exports.
However, some market watchers see work still to be done. “There is still
a long way to go for the country to ensure clear investment rules and
legal certainty, for which a transparent and sustained legal framework is
key,” Mario Belardinelli, mining leader at KPMG in Argentina, said in April.
In April 2023, Eramet subsidiary Eramine Sudamérica was admitted
into the 2021 export promotion program; the company aims to start
production in 2024 at the Centenario-Ratones project, which will
be Argentina’s first lithium operation to use 100% direct extraction.
Construction began in 1H22.
13
Construction at Centenario-Ratones. Credit: Eramine
Environmental Concerns
With the rise of lithium projects has come scrutiny of environmental
impacts. In March, Argentina’s supreme court ordered the federal and
provincial governments of Salta and Jujuy to report on whether current
lithium projects are affecting water and the environment.
The ruling, which came as a result of claims brought by
indigenous communities and the foundation FARN, involves Lake
Resources, Ganfeng Lithium, Lithium Americas, Minera
Exar, Allkem, Dajin-Litica, Eramine Sudamerica, Posco, Rio
Tinto and Argosy Minerals, among others. The ruling also mandates the
formation of a committee of experts to evaluate the impacts of lithium
projects.
There is also a proposed wetlands protection bill awaiting debate in
congress, which could have implications for lithium assets.
These trends are likely to further support the development of DLE
initiatives in Argentina.
China Moves In
Chinese companies can often adopt more flexible accounting practices
than their North American counterparts, as well as operate under a
mission to secure lithium to feed its battery and EV industry, more than
secure profits. These characteristics have led to an influx of Chinese
investment in Argentine lithium, to the point where the host country
could suffer tensions with the US, according to Control Risks’ Pera.
Tibet Summit, Ganfeng, Tsingshan and Zijin are all heavily invested in the
country. Tibet plans to invest US$2.2bn in Salta province to produce
battery-grade lithium carbonate in the Salar de Diablillos (Sal de los
Angeles) and build a plant in Salar Arizaro, hoping to begin production in
2024.
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Ganfeng owns the Mariana project in Salta, which is targeting output

of 20,000t/y lithium chloride (10,000t/y LCE) in a first phase, and also
acquired the Lithea mining group for US$962 million and the rights to
the Pozuelos-Pastos Grandes. In Jujuy, Ganfeng is the majority partner
in the Caucharí-Olaroz, which just launched phase 1 production and will
soon expand.
And Tsingshan owns 49.9% of the Centenario Ratones project in Salta (a
JV with France’s Eramet) and announced it will double its investment to
increase production to 50,000t/y LCE from 2024.
Zijin Mining also began construction of a US$380 million project in Tres
Quebradas, in Catamarca, to produce 20,000t/y of LCE in an initial
phase. Plans include a near-term expansion.
Argentine economy minister Sergio Massa met with representatives of
Tibet, Ganfeng and Tsingshan on an official visit to China in May.
Argentina lithium projects in the BNamericas database that have
estimates for production volume and/or capital requirements:
Argentina: Lithium Projects in Exploration and Study Phases

LCE
Project Stage US$MN Province Controller
Capacity
Second Expansion of Fenix 30000 Feasibility 700 Catamarca Livent
Rincón Salar (Rio Tinto) 3000 Feasibility 600 Salta Rio Tinto
Kachi 50000 Feasibility 544 Catamarca Lake Resources
Hombre Muerto West
20000 Feasibility 439 Catamarca Galan Lithium
(Galan Lithium)
Hombre Muerto North Salta,
5000 Feasibility 93 NRG Metals
(NRG Metals-Lithium South) Catamarca
Sal de la Puna 24000 Feasibility - Salta Lithium Americas
Lithium Americas /
Caucharí-Olaroz (Stage 2) 20000 Prefeasibility - Jujuy
Ganfeng
Sal de los Angeles (ex Salar
50000 Scoping pea 700 Salta Tibet Summit
de Diablillos)
Tolillar Salar 50000 Scoping pea - Salta Alpha Lithium
Early design &
Fenix Third Expansion 30000 - Catamarca Livent
engineering
Candelas (Hombre Muerto Advanced
14000 408 Catamarca Galan Lithium
Salar) exploration
Advanced
Pozuelos-Pastos Grandes 50000 338 Salta, Jujuy Ganfeng
exploration
Advanced Catamarca ,
Gallego 8000* 320 Everlight Resources
exploration Salta
Advanced
Jama 2300 14 Jujuy PlusPetrol
exploration
Initial exploration Salta,
Laguna Verde (Argentina) - 250 Ultra Lithium
& discovery Catamarca
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Argentina: Advanced Lithium Projects

LCE
Project Stage US$MN Province Controller
Capacity
Cauchari-Olaroz, First Phase Ramp-up/ Lithium Americas /
40000 979 Jujuy
(Minera Exar) Commissioning Ganfeng
Salar de Olaroz Expansion Phase Ramp-up/
25000 425 Jujuy Allkem
2 (Sales de Jujuy) Commissioning
Sal de Oro (Hombre Muerto Salta,
25000* Under construction 830 Posco
Norte) Catamarca
Centenario-Ratones 24000 Under construction 680 Salta Eramet / Tsingshan
Mariana 20000 Under construction 600 Salta Ganfeng
Fenix expansion 20000 Under construction 450 Catamarca Livent
Tres Quebradas (3Q) 20000 Under construction 380 Catamarca Zijin Mining
Sal de Vida (Stage 1) 15000 Under construction 271 Catamarca Allkem
Rincón (Argosy, Puna Mining) 10000 Under construction 141 Salta Argosy Minerals
Awaiting
Pastos Grandes 24000 construction 448 Salta Lithium Americas
decision
Environmental &
Sal de Vida (Stage 2) 30000 524 Catamarca Allkem
Social evaluation
*Lithium hydroxide capacity. Source: BNamericas Project Profile Database
16
Technology Changing
the Brine Game
In terms of cost competitiveness in the world market, Australia, the main
global producer of lithium, has the advantage of greater speed and lower
capital intensity when building new spodumene mines, compared to the
capital and permitting necessary to build a new brine operation in Chile
or Argentina. One reason for this, according to experts, is that permitting
processes in Australia are more streamlined and non-political, but it also
has to do with the type of operation typical in each country.
“Australia exports spodumene concentrate to China to be converted
into chemicals, while Chile produces chemicals,” notes Cameron
Perks, principal lithium analyst at Australian firm Benchmark Mineral
Intelligence, as quoted in local newspaper La Tercera. That means that
Chile’s operations, and most of the capital investment, are focused on
carbonate and hydroxide plants, whereas in Australia most lithium mining
operations stop at the concentration of the spodumene ore typical of the
deposits there. Most concentrate is exported without further processing
– only recently is this starting to change – and this is an important factor
in Australia’s rapid growth in mined lithium production over the last
decade.
Even so, the “Lithium Triangle” of brine deposits found in northern Chile
and Argentina and southern Bolivia has long been considered to hold a
strong global advantage in terms of quality and quantity of resources.
Now, the lithium industry in the arid Triangle faces the challenge of
reducing water consumption in regions of water scarcity, and the
evaporation method - in which brine is left out to dry under the desert
sun - has been criticized for not allowing the reinjection of brine into the
aquifers and for causing a significant loss water, generating concern in
the surrounding communities and among environmentalists. The advance
of mining, justified by the energy transition, is seen as a threat to the life
of the communities and ecosystems that depend on the high Andean salt
flats and wetlands. This also causes delays in the permitting of projects.
For this reason, the national lithium strategy in Chile includes a clause
to incorporate direct lithium extraction technology (DLE), since it could
have certain benefits over the solar evaporation technique.
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On the one hand, it takes less time to achieve production - a matter

of days versus up to 18 months to produce lithium from brine using
evaporation. In addition, DLE makes it possible to exploit low-grade
resources, does not depend on the weather, and avoids in large part
the loss of water by evaporation, disturbing the hydrological balance
less, explained Oswald Eppers, representative of K-UTEC AG Salt
Technologies in South America, during a seminar in May hosted in
Santiago by Chile’s Universidad de Desarrollo and the Australian
University of Queensland.
However, solar evaporation surpasses DLE in other respects; it generates
a smaller CO2 footprint and is a proven and scalable technology.
Evaporation is advantageous in terms of operating expenses, but DLE is
more competitive in terms of initial capital expenditure, Eppers added.
Another key difference is that lithium recovery rates are superior using
DLE at around 70-90% or higher, versus 40-60% using brine evaporation.
Drilling at the Kachi project in Argentina, which is piloting DLE. Credit: Lake Resources
Goldman Sachs (GS) has called DLE technology a potential game changer,
predicting that it could be implemented in both Chile and Argentina by
2025-30 despite challenges around scalability and brine reinjection. Not
only will DLE widen – as opposed to steepen – the LatAm lithium cost
curve, it could also substantially increase lithium supply, reducing market
deficits and/or augmenting surpluses.
GS calculates that, if 20-40% of Latin American brine projects
implemented DLE, future Latin American brine LCE capacity could
increase by 70,000-140,000t/y, or 35%, over the bank’s base case supply
estimates from 2028. This would equate to an 8% increase in global raw
lithium supply over estimates considering the current state of the project
pipeline.
18
“Much like shale did for oil, DLE has the potential to significantly
increase the supply of lithium from brine projects, nearly doubling lithium
production/yield and improving project returns, though with the added
bonus of offering sustainability benefits and ESG credentials for its
implementors,” GS analysts wrote in April, stating also that an average
DLE project achieves a higher NPV and IRR in their modeling than an
average pond evaporation project.
There are currently seven projects in Argentina and four in Chile working
toward DLE implementation, as well as five in China, eight in the US, two
in Canada and one in Germany, according to GS.
“Policy changes, such as Chile’s recent national lithium policy, may
further support an accelerating implementation of DLE technologies,” the
analysts added.
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Mexico: Uncertainty
Stalling Projects
Lithium projects in Mexico remain stagnant. The future of the
concessions that the government has been seeking to renegotiate since
the beginning of this year remains unknown – concessions that were
granted before the nationalization of the white metal in April 2022.
Additionally, a new reform to several laws that govern mining, which
came into force in May 2023, has brought new concerns among
companies holding titles to exploit lithium and regarding the arrival of
foreign investment in this strategic metal for Mexico and in the global
energy transition.
In January, President Andrés Manuel López Obrador reported in one
of his daily press conferences that his administration was seeking to
renegotiate the lithium concessions granted prior to the first mining law
reform, of April 2022, with a view to paving the way for the Sonora Clean
Energy Plan. The president reported that the intention was to reach
agreements with “one or two” companies that were granted concessions
for lithium, such that state company LitioMx – created in August 2022 –
manages all production.
That same month, López Obrador specified that he was already
negotiating a conciliation agreement with a private company – without
providing its name – to recover a lithium production concession granted
in the state of Sonora and avoid starting a legal process or litigation.
Sonora is the location of the project of the same name operated
by Bacanora Lithium, in turn owned by China’s Ganfeng Lithium. The
early-stage exploration projects Elektra and Nogalito are also in Sonora
state.
According to Juan Carlos Serra, a partner at the law firm Basham, Ringe y
Correa, the decision to nationalize lithium and subsequently renegotiate
the previously granted concessions took a sector that is in its early
stages by surprise, because, in addition, “Mexico will require advanced
technology and an important budget to carry out activities on its own in
the short term.”
“For this reason, it will be important to observe the projects announced
by the federal executive in the coming months, in order to evaluate
potential synergies between the private initiative and the decentralized
public body LitioMx,” says Serra. “Without a doubt, there is potential
growth that we hope will have the desired results.”
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Serra specified that “since lithium production is the exclusive purview

of the Mexican government, the tendency is that the contracts must
adopt or migrate to public-private partnerships, joint ventures or [be
carried out] through the outsourcing of activities necessary for lithium
production, but always under the control and interest of the Mexican
state.”
“We consider that in all cases [the contracts] will be binding, and in
the event of potential early terminations or executive decisions that
hinder the execution or continuity of said contracts, in accordance with
current legislation on administrative contracts, companies may claim
compensation,” says the lawyer.
Concessions In the Air
The BNamericas database lists 20 projects with concessions to exploit
lithium in Mexico, with five main players in charge: China’s Ganfeng and
Canadian firms Rockland Resources, Advance Lithium (formerly Advance
Gold), Silver Valley Metals (formerly OrganiMax Nutrient), and One World
Lithium, with several salt flats each. Activity is currently suspended at
most of the projects.
In February, López Obrador was expected to award initial lithium
concessions to “a public company” that did not identify during a visit to
Sonora, as he himself had announced previously. Instead, he decreed
a lithium mining reserve zone of 234,855 hectares located in several
Sonoran municipalities and instructed the energy ministry to follow it up.
However, the decree generated more uncertainty because it reiterates
that “no mining activity related to lithium can be carried out” within
such an area. The announced delivery of the first concessions to a state
company, presumably LitioMX, was left in suspense, and little news has
emerged about the negotiations with mining companies that hold lithium
concessions announced by AMLO – the acronym often used to refer to
López Obrador – at the beginning of this year.
Only Advance Lithium and Silver Valley Metals have confirmed – in
statements published in March and May, respectively – being in talks
with the Mexican government and willing to form joint ventures with
it to exploit lithium in Zacatecas and San Luis Potosí. Silver Valley later
reported that MexiCan, the second most advanced lithium project in the
country and which spans sediment and brine targets across three salars
also containing potash, remains open to expansion through exploration.
21
Stockpiling mined ore at Sonora pilot plant. Credit: Bacanora Lithium
Ganfeng reaffirmed his commitment to its Sonora project in September,

posting in an interim report on the Hong Kong stock exchange website
that it would further accelerate construction of the lithium clay deposit,
but has remain tight-lipped regarding details of its progress. A local
report in February 2023 cited a Ganfeng spokesperson as saying that the
company did not have the necessary permits to begin construction and
the concession was still under review.
Meanwhile, Rockland Resources suspended activities at its Elektra
lithium project in Sonora last year, pending clarification from the Mexican
authorities on its status and while there was no clarity on Mexican
nationalization legislation, the company’s chief executive, Mike England,
told BNamericas in 2022.
Possible Scenarios
It remains to be seen how the state will behave toward such companies
and their projects, as well as their reaction to any state action to
associate or to expropriate their projects. “In the event of a possible
expropriation, despite the minimal investments they have made to date,
these companies could still resort to suing or putting pressure on Mexico
based on the Comprehensive and Progressive Agreement for Trans-
Pacific Partnership (CPTPP), which has been ratified by Canada and
Mexico,” said the NGOs MiningWatch Canada and the Mexican Network
of People Affected by Mining (REMA) in a report they published this year
on lithium in Mexico.
“Similarly, if the Ganfeng company decides, it could sue under the
Bilateral Investment Treaty between Mexico and China or use the
financial, technological and legal advantages of its business and of this
treaty as leverage in its favor in the case of negotiations with the state,”
adds the report, which was published in February.
22
According to Juan Carlos Machorro, leading partner in transactional and

financial practice at the Santamarina + Steta law firm, in Mexico there is
a constitutional principle of non-retroactivity of the law. This principle
guarantees the validity of mining concessions granted before last year’s
reform, including those for lithium, as well as the participation of private
parties, the lawyer said in an interview in April.
The most recent mining reform, in force since May, establishes in a
transitory article that previously granted exploration and production
concessions will maintain the duration established therein, although
it does not mention anything about extensions. However, in practice,
private investment in lithium remains a gray area, as several industry
players have said.
The new legislation for the sector also establishes that the economy
ministry may grant direct allocations to companies in the parastatal
public sector for the exploration or production of minerals with no
competition or expiration, provided that they are minerals reserved for
the state, such as lithium or uranium.
Machorro had said prior to the reform coming into effect that, if this legal
provision were approved, it would complete the circled opened in 2022
for LitioMx by giving it advantages over private companies, as is the case
in the energy market with the Federal Electricity Commission and state
oil company Pemex.
“Mexico is not an attractive destination to invest in lithium because the
mining law reform of April 2022 reserved everything related to lithium
only for the government; ergo, no private party, national or foreign,
will have access to any exploration or production of the element,” says
Armando Alatorre, a Mexican geologist who is an expert in lithium.
Although Alatorre acknowledges that a factor that could open the doors
to the participation of private companies is that among the functions
assigned to LitioMX is that of seeking associations, the expert is
concerned that LitioMx has been in existence for ten months and “they
have not announced anything clear, nor specific.”
Serra, the partner at Basham, Ringe y Correa, explains that since the
so-called “nationalization” of lithium occurred as the conclusion of a
legislative process with the reform of April 2022, in the future this could
be modified “depending on the will of legislators, and/or the intention of
attracting private investment to said sector.”
“Investment protection is provided for in the international treaties to
which Mexico is a party, as well as in the political constitution of the
United Mexican States, so there will always be means of defense to
resort to defend against actions that are considered contrary to the
applicable regulation,” Serra says.
23
Brazil: Nurturing
the Potential
The lithium segment has potential to grow fast in Brazil, although to
develop the full potential of the country in the segment requires the joint
effort of states and private sector players.
Brazil accounts for 1% of known lithium reserves in the world, according
to data from the USGS. The country’s deposits are composed of lithium
in pegmatites. Most of these reserves are found in iron ore-rich Minas
Gerais state, but experts say that the potential of the country is higher.
“In Brazil, the only state where the lithium production already exists is
in Minas Gerais state, concentrated in the Jequitinhonha Valley region.
However, we have large potential to be explored in Brazil, in several
states,” says Iona de Abreu Cunha, geologist and head of the special
projects and strategic minerals division at the country’s geological survey
SGB. “I also see potential in the northeast region of the country and even
in other locations also in the state of Minas Gerais.”
“To develop the potential, we first need to invest more in the survey
phase to identify all potential. For this, we need public policy to
encourage the survey phase, but at the same time we also need
investment from the private sector, to establish production chains close
to the projects. It is a set of actions that are necessary,” Cunha adds.
Growing Community of Lithium Companies
One of the advantages for lithium development in Brazil is that the
private sector sees the public sector’s approach as market friendly.
Macro conditions also encourage investment.
“The stable currency environment and extremely supportive government
initiatives are a key point of difference compared to some of the other
emerging countries. We see a runway for Brazil to be one of the top
producers in the lithium sector globally,” says Christopher Gale, the
founder and managing director of Australia’s Latin Resources, which
owns the Salinas lithium project in Brazil.
In April 2023, the lithium segment in Brazil saw a milestone, with Sigma
Lithium initiating the production of its flagship Grota do Cirilo project.
Along with Grota do Cirilio, all the most advanced lithium projects in
Brazil are in the Jequitinhonha Valley, which is one of the country’s
poorest areas. The valley suffers from low and irregular rainfall for most
of the year, meaning that water use is a serious issue in the area.
24
Production at Grota do Cirilo. Credit: Sigma Lithium Resources
Along with Sigma, other companies that are investing in the state’s
lithium segment include Atlas Lithium Corporation, Latin Resources,
Deep Rock and Lithium Ionic.
In May, Minas Gerais state launched an initiative to grow its lithium
industry and turn it into an international hub. Called Lithium Valley Brazil,
the initiative will focus on attracting companies and investment, as well
as workforce training and technology development. The valley’s area is
composed of the 14 municipalities that have the largest lithium reserves
in the country.
Another point in favor for Brazil is the fact that the country is seen as a
reliable trading partner. “Brazil is a country with strong commercial ties
with North America and also Europe, as well as with other jurisdictions.
It is a country that is seen as a reliable trading partner on a global
scale,” says Blake Hylands, CEO of Lithium Ionic Corp, which in Brazil is
developing the Itinga project.
Cultivating Funding
A bottleneck in the country is the absence of funding lines in local
currency to finance projects in their early stages. In view of this,
companies in the sector operating in Brazil are listed today on the
Canadian and Australian Stock Exchanges, where there is already a more
mature capital market for such an investment profile.
The Brazilian association of mining companies, Ibram, has been engaged
in negotiations in recent years with the government and with local
investors with a view to developing the local capital market as a financing
mechanism for projects in initial stages. The initiative has centered on
educating local investors regarding all phases of projects related to
mining and the risk-reward profile of early-stage mining investment.
25
Bolivia: DLE and

New Partners
Bolivia has long sought alternatives for the development of its lithium
brine resources and, given the problems and delays that have arisen with
the evaporation pool model, the country now plans to implement lithium
direct extraction technology. Beyond lithium carbonate, Bolivia seeks to
develop a cathode and battery industry, something the country has been
planning for at least 15 years.
In January, the Andean nation selected a Chinese consortium
called CBC – made up of battery maker CATL, recycler BRUNP and
mining and metals firm CMOC – for the installation of two lithium
industrial complexes located in the salt flats of Uyuni, in Potosí, and
Coipasa, in Oruro. Investment for the plants was initially estimated at
US$1.0 billion by the executives of the state-owned Yacimientos de Litio
Bolivianos (YLB), although it is now thought that capex could be in the
range of US$1.4 billion to US$2 billion, and some estimate that each
plant could cost at least US$4.0 billion.
The objective, according to Carlos Ramos, president of YLB, is for the
plants to start production at the end of 2024 or the beginning of 2025.
Until now, the details of the agreement have not been made public, nor
the way in which the construction and production of the mineral would
be financed, in a country in which the state has a monopoly over the
entire production chain. CBC is expected to deliver the Uyuni feasibility
study in a three-month timeframe, with details of existing resources, final
costs of the plant and location, among other details.
Bolivia signed further agreements in late June with China’s Citic Guoan
and Russia’s Uranium One. Total investment planned under the three
deals amounts to US$2.8 billion.
In a bid to capture high lithium prices, the administration of President
Luis Arce wants lithium production with DLE technology to begin before
the end of its term, in November 2025, and is considering alternatives
such as a strategic agreement with CBC so that in addition to providing
the technology to build the plants, it would also operate them and
receive royalties in return.
26
In a first stage, it is planned that all the lithium carbonate produced will
be destined for export, mainly to China, Russia and European companies;
in a second stage, the construction of cathode and battery plants is
envisioned, since the government’s objective is for Bolivia is to produce
batteries for internal consumption and for the regional market.
Credit: YLB
Arce will seek the industrialization of lithium not only in Uyuni and
Coipasa; the plan is more ambitious and includes the Salar de Pastos
Grandes and other smaller deposits in the southeast of the country.
YLB has carried out prospecting and drilling work at Coipasa and
Pastos Grandes and is currently interpreting the data to gain a better
understanding of the composition and depth of the brines. In the coming
months, the plan is to start prospecting at other salt flats to determine
the potential of possible deposits. YLB also says it aims to work with
multiple companies on the road to lithium industrialization.
According to the US Geological Survey, Bolivia holds 21Mt of lithium
resources, but does not register any economic reserves.
Conclusion
Striking a balance between project economics that trigger investment
and lithium prices that help make EVs widely affordable is one of the
keys to the electromobility revolution that promises to help drive
decarbonization.
DLE technology could change the game in the near term, allowing the
entry of a larger roster of players and tipping the scale toward market
balance or surplus. In the medium and longer term, secondary supply will
come into the picture.
27
“I think it’s [the global lithium price] going to stay high for the next 10
years while we ramp up production. Then eventually we’ll have more
recycling and production happening and hopefully batteries will become
more efficient over time and less lithium will be required to get an EV on
the road. Then prices will fall back into something that’s more normal,”
says Amanda Hall, CEO of DLE developer Summit NanoTech.
“Right now, prices are too high and if it gets too high this could prevent
EVs from being produced economically, then that’s going to hurt us in
the end. As humans we need more EVs, so we need to lower the price of
lithium to help make that happen.”
While Australia has been leading in production growth over the last
decade, Latin America remains a critical center for lithium supply.
In Chile, the Boric government has set about to lend a more environment
and community focused approach to investment in general, across
sectors, and lithium is no different. Being that the state already controls
most lithium concessions, nationalizations are unnecessary to ensure
state participation in the sector; however, private players – long eager to
enter – continue to await clarity on how the new policies will be applied.
But Chile could risk missing the lithium boat once again, driving
investment to neighboring Argentina and elsewhere, if it is slow to
implement the changes and if the state role is too predominant.
“The primacy of the state will represent a risk for private companies
given the possibility of political interference in decisions that should be
technical,” says Leandro Lima, senior analyst for the Southern Cone at
Control Risks.
Over the Andes, Argentina hopped on the lithium train without a
single glance back and has become a success story despite challenges.
Lithium is now seen as an important element in the country’s economic
development plans.
The region’s dark horse could be Brazil. While unlikely to overtake Chile
or Argentina, the open policies and active encouragement of investment
could attract more players to advance projects there.
In Mexico, like most sectors, lithium is in wait and see mode thanks to
the actions of President López Obrador, whose term expires at the end
of 2024. Players will be watching the elections in June of next year for
signs of a political change, which, even if it comes, will take time to undo
the restrictions and blow to confidence delivered by the incumbent.
28
And in Bolivia, the state continues its unbending efforts to develop its
lithium resources. But in the absence of any real change in the nation’s
underlying policy and ideology – or further proving of the quality of its
lithium deposits – it appears development will continue to be limited, as
over the last couple of decades. It will be worth monitoring the state’s
latest agreements with investors to see how these advance.
As long as lithium continues to offer enticing economic retunrs, the race
to develop new supply is sure to continue, and even intensify in the
coming years. The winners will depend on who is able to best support
near-term investment flows with open markets, attractive conditions and
fluid project permitting.
Author Elinor Trebilcock, Sharay Angulo Casique,

Mercedes Alvaro, Laura Superneau and Rogerio
Jelmayer
Design Vanessa Villamizar Business News Americas. Los Militares #6191, Las Condes, Santiago, Chile 29
Editor Laura Superneau +56 2 2941 0300 info@BNamericas.com
Contact lsuperneau@bnamericas.com
Discover more
Mining Survey 2021: High

Alert as Political Risk Takes
Center Stage
Copper in Latin America:

The Only Way Is Up
Mining Capex 2021
READ THE REPORTS
Los Militares #6191, Las Condes, Santiago, Chile

+56 2 2941 0300 +1 65 0319 8307
info@BNamericas.com

Lithium in Latin America New Technology New Policy New Deals

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July 2023

Intelligence Series | Mining & Metals

Lithium in Latin America:

Lithium demand is growing rapidly, driving prices and prompting a

Chile: Enter the State 6

Argentina on the Rise 12

Technology Changing the Brine Game 17

Mexico: Uncertainty Stalling Projects 20

Brazil: Nurturing the Potential 24

Bolivia: DLE and New Partners 26

Discover more READ THE REPORTS

Mining Survey 2021: High Alert as Political Risk

Sal de Vida. Credit: Allkem

In Latin America, Argentina offers the most promise for near-term

As part of the new strategy, state-owned copper miner Codelco will be

At least 46 companies from 12 different countries, including Australia,

Credit: CleanTech Lithium

In this line, the strategy points to the formation of joint ventures

Key Projects in Chile

Operations in the Salar de Atacama. Credit: SQM

The Sales Maricunga project, operated by SIMCO, involves an investment

Argentina on the Rise

Indeed, interest abounds among foreign investors despite the country’s

Construction at Centenario-Ratones. Credit: Eramine

Ganfeng owns the Mariana project in Salta, which is targeting output

Argentina: Lithium Projects in Exploration and Study Phases

Argentina: Advanced Lithium Projects

On the one hand, it takes less time to achieve production - a matter

Serra specified that “since lithium production is the exclusive purview

Stockpiling mined ore at Sonora pilot plant. Credit: Bacanora Lithium

Ganfeng reaffirmed his commitment to its Sonora project in September,

According to Juan Carlos Machorro, leading partner in transactional and

Production at Grota do Cirilo. Credit: Sigma Lithium Resources

Bolivia: DLE and

Author Elinor Trebilcock, Sharay Angulo Casique,

Mining Survey 2021: High

Copper in Latin America:

Mining Capex 2021

READ THE REPORTS

Los Militares #6191, Las Condes, Santiago, Chile

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