Creation of 'Lithium OPEC' Underway in South America as EV Demand Surges Worldwide

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Mar 30, 2023, 10:15 ET

FN Media Group Presents USA News Group News Commentary

VANCOUVER, B.C., March 30, 2023 /PRNewswire/ -- USA News Group - Thanks to the Lithium Triangle and a new mine coming online in Brazil, South America is set to become to lithium what the Middle East is to petroleum. Discussion surrounding the creation of a so-called "Lithium OPEC" is underway between Argentina, Chile, Bolivia, and Brazil, with the group potentially set to emulate similar strategies of OPEC, according to a group of Argentinian representatives at the annual PDAC Convention held in Toronto in March 2023. With the three Lithium Triangle countries (Argentina, Chile, Bolivia) making up more than 60% of the world's known lithium resources, it's clear why there's been a race to secure lithium assets in the region. Several miners are making huge strides in South America's lithium scene, including Lithium South Development Corporation (TSXV:LIS) (OTCQB:LISMF), Livent Corporation (NYSE:LTHM), Allkem Limited (TSX:AKE) (OTC:OROCF), Lithium Americas, and Rio Tinto Group (NYSE:RIO).

Based out of Vancouver, Canada, Lithium South Development Corporation (TSXV:LIS) (OTCQB:LISMF) is developing its flagship Hombre Muerto North Lithium Project (HMN Li Project) in Salta Province, Argentina. Already with a solid maiden resource of 0.57 MT Li₂CO₃ equivalent (M+I) to build upon from 2019, Lithium South is working diligently to expand through a drill program to significantly increase the resource size, while moving forward to a full Feasibility Study for the HMN Li Project.

The HMN Li Project is surrounded by two leading lithium producers, Korean giant POSCO and Livent Corporation (NYSE:LTHM) at the northern end of the renowned Hombre Muerto Salar.

Much of the attention in early 2023 has been upon what's been dubbed the Alba Sabrina resource expansion drill program, where the company has received excellent lithium values from all holes completed to date. These included an average of samples of 663 mg/L Li, with a range of 320-752 mg/L Li, and ranging from 569 mg/L Li to 708 mg/L Li in another drill hole.

"We are very pleased with the exploration results to date and look forward to the calculation of an upgraded lithium resource at the HMN Li Project," said Lithium South President Adrian F.C. Hobkirk. "Hole AS02 is the deepest hole completed to date at the HMN Li Project and demonstrates the potential to significantly expand the total resource for the project. We are very pleased with the high lithium and low magnesium values."

So far the evaluation of the HMN Li Project has progressed significantly, including a Preliminary Economic Assessment (PEA) completed in April 2019. This assessment was based on an original Tramo claim that covered 383 hectares of the project's initial claims. Today, the property package comprises 5,687 hectares spread across 9 mining concessions.

As well, Lithium South has taken steps to enhance the potential of their project for Direct Lithium Extraction (DLE) by providing three 2,000-liter bulk samples of high-quality HMN Li brine for testing. The tests were conducted by three strategic partners, namely China's Chemphys Chengdu, Argentina's Eon Minerals, and California-based Lilac Solutions.

US miner Livent Corporation (NYSE:LTHM) is coming off of another strong year of production in 2022, gaining momentum as Q4 2022 surpassed Q3 2022 by 79%, and nearly quadrupling its EBITDA from the same quarter in 2021.

"Livent had another strong performance in the fourth quarter and finished the full year 2022 with record financial results," said Paul Graves, President and CEO of Livent. "We expect to generate higher profitability in 2023 as we build on this performance. This is driven by further expected increases in average realized pricing across our lithium products, as well as higher sales volumes with the first phase of our Argentina expansion coming online during the year."

Livent remains on schedule to deliver upon its previously announced capacity expansions, with the first 10,000 MT expansion's commercial volumes expected in H2 2023, and another 10,000 MT expansion by the end of the year. As well, Livent is an active 50% partner in the Nemaska Lithium project in Quebec, Canada, which is on schedule for a feasibility study in 2023, and commercial sales expected in 2025.

After the merger of Orocobre and Galaxy Resources to form Allkem Limited (TSX:AKE) (OTC:OROCF), its flagship asset moving forward is the 66.5%-owned Olaroz project in Jujuy Province, Argentina, which is currently in production while the company works for more expansion.

Allkem reported record revenue from Olaroz in H1 2023 so far, having increased by ~4.5x to US$296 million on sales of 6,852 tonnes of lithium. As well, the company is working to develop its tier 1 brine project in Catamarca Province on the Salar del Hombre Muerto, just ~200km from Olaroz.

"Amidst strong demand for lithium products we have delivered first production at the Naraha Lithium Hydroxide Plant and advanced Olaroz Stage 2 to commissioning," said Martin Perez de Solay, Director and CEO of Allkem. "Sal de Vida construction is well underway, and James Bay is advancing with approvals received by the federal government for the ESIA. With two revenue generating operations being supplemented in the near future by Olaroz Stage 2 and a strong balance sheet, we are fully funded to complete construction at Sal de Vida and the development of James Bay."

Despite much of its attention going towards becoming the second lithium producer in the USA, Lithium Americas has been steadily working to bolster its Argentinian assets as well, including agreeing to acquire Arena Metals' and its Argentina assets for US$227 million (C$311 million).

"This Transaction will consolidate the highly prospective Pastos Grandes basin, and creates an exciting opportunity for Lithium Americas… to add incremental growth in one of the most important lithium producing regions in the world," said Jonathan Evans, President and CEO of Lithium Americas. "The significant synergies between our two projects and a better understanding of the basin will enable us to advance development planning and maximize our growth pipeline in Argentina."

Moving forward in a move that should keep the values of their international assets more clear to the market, Lithium Americas has announced a move to split into two companies, with the Argentina focus being named Lithium International whose Argentine lithium assets will continue to include the near-production Caucharí-Olaroz lithium brine project in Jujuy, Argentina.

Back in March 2022, global mining giant Rio Tinto Group (NYSE:RIO) officially entered the Argentina lithium scene, completing the acquisition of the Rincon lithium project in Argentina for $825 million.

"Rincon strengthens our battery materials business and positions Rio Tinto to meet the double-digit growth in demand for lithium over the next decade, at a time when supply is constrained," said Jakob Stausholm, CEO of Rio Tinto. A Resource Estimate from July 2021 of Rincon lists M+I Resources of 5.8 million tonnes Li₂CO₃ equivalent, as well as Inferred Resources at just under 6 million tonnes.

Following the Rincon acquisition's completion, Rio Tinto's Bard approved $194 million to develop a small starter battery-grade lithium carbonate plant with a capacity of 3,000 tonnes per year.

Amid that budget, the investment includes early works to support a full-scale operation. Construction activities progressed on phase one camp facilities with rooms for 250 persons completed. Rio Tinto also acknowledged that airstrip permits were received, contractors were mobilised, and that first saleable production is expected in H1 2024.

For more information please visit: https://equity-insider.com/2023/02/28/how-a-new-sustainable-lithium-production-technology-could-save-the-ev-revolution/

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USA News Group
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