The Lithium Triangle: The War For White Gold

19.12.2016 • Gold and Natural Resources

By Selva Freigedo – Port Phillip Insider Extra (Australia) –

Nothing grows in the ‘Salar del Hombre Muerto’ (Spanish for Dead Man’s Salt Flat). There is no vegetation and no water (at least not visible), only salt. This desert land is in the Puna de Atacama, Argentina.

You would think humans would stay away from this area. And they would, if it weren’t home to one of the most important lithium productions in the lithium triangle.

The lithium triangle is an area between Chile, Argentina and Bolivia. It contains more than 70% of the known reserves of lithium in the world, or as it is otherwise called, ‘white gold’.

Lithium products used in batteries come from three sources: hard rock mining, battery recycling, and brine. Brine from salt flat projects is cheaper than hard rock extraction.

In this triangle, companies harvest the harsh sun and use it to evaporate brine from the ponds. The oily substance left behind is lithium.

Argentina is currently the third largest lithium producing country in the world, after Australia and Chile. But several factors could bring Argentina to the forefront of the production market.

Even though Bolivia has more white gold than any other country, it is hostile towards investors. In fact, private companies are not allowed to exploit lithium in Bolivia.

The Bolivian government has an ambitious plan. President Evo Morales has declared the lithium deposits a permanent reserve of the state. Instead of exporting raw lithium, Bolivia wants to process it on its soil by building battery plants. Yet the project is behind schedule and Bolivia could miss most of the lithium hype.

Chile has some of the best physical resources in the market. Yet its lithium share in the market is shrinking. Chile is not handing in more lithium concessions at the moment.

The main producer, SQM [NYSE:SQM], is in a legal battle against the government over royalty underpayment. The Chilean authorities have threatened to revoke SQM´s license.

SQM had been trying to increase production to 50% of the world´s supply, but it’s a race against time. And it looks like environmental problems in Atacama won´t allow them to increase production.

In 2015, Mauricio Macri won the Argentinean presidential election. Since then he has opened Argentina’s doors to anyone who wants to exploit the salt flats. He wants to increase competition against Chile and Bolivia.

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