Interview : David Guerrero
How do you asses the future prospects for the lithium industry internationally?
DAVID GUERRERO: The global lithium market is relatively small, with approximately 220,000 tonnes of lithium carbonate equivalent (LCE), which contains 18.9% of lithium, produced by a relatively small amount of players. In 2015 the price of LCE per tonne increased to around $15,000 due to a significant supply deficit, which reactivated international interest. At this price, investment projects in lithium are viable, even when taking into account that it has to be transported considerable distances. The production of lithium carbonate or lithium hydroxide is becoming more specialised as clients have different needs. Therefore, lithium production cannot be standardised, making it a speciality product rather than a commodity.
We are seeing greater interest from the automotive industry in lithium production, and this is due to the current profitability of manufacturing batteries, which is around 3-4% according to available data. Thus, the automotive industry is looking to enter into in-house battery production, a solution that will be of paramount importance in the next decade when electric cars become a widespread reality, as today the bulk of battery production is in Japan, China and Korea. We are in the process of transitioning towards the electrification of the automotive industry ourselves, and Tesla is a leading example of this, but there are many examples of electric vehicles on the Chinese market as well.
What possibilities exist for the manufacturing of lithium batteries in Argentina?
GUERRERO: Different products require different types of lithium batteries. For example, when producing cars there are vast differences between providing a battery for a sports car versus an urban vehicle. The amount of lithium carbonate in these batteries ranges from 2% to 11% at best. In this instance, manufacturing a battery would still require 89% of other elements such as rare earths, nickel, zinc or copper, among others. In Latin America, the availability of these minerals is very limited, so they would need to be imported. Lithium hydroxide and lithium carbonate are the two products that have the greatest market share in Argentina today, and we are already seeing battery manufacturers demand more of the former owing to a lack of supply.
Making batteries in Argentina is a possibility, but the conditions to become competitive on a global level are currently not in place. Our potential as a country lies in the upstream segment, where we could become a global supplier of lithium carbonate and lithium hydroxide of significant added value. For this to happen, however, we would need a stable regulatory framework and for the state to create the right conditions for the private sector to grow, as these players would be vital in generating income and employment across the country.
How are local providers responding to demands from multinational corporations (MNCs) for higher quality standards in the industry?
GUERRERO: Until the arrival of the second wave of investments back in 2007, the development of local expertise was virtually non-existent. Today, the situation has changed due to advances made by the local business sector, but there is still a long way to go to reaching the quality of the international level. As a supplier, of course companies want to generate wealth through greater activity in the lithium industry, but there are situations today in which suppliers are still unable to meet the best practice standards presented globally.
Hence, there is a need for the commitment of MNCs to accompany the development of local suppliers, which would ultimately reduce costs. On the side of the supplier, there must be a concerted effort to boost their quality of service to meet international standards. We are definitely moving in the right direction, perhaps not quite at the required pace, but with enough determination to bring the local industry up to a global level.
