Four new lithium mining projects in Argentina will be put into production in the coming weeks to months, which will nearly double Argentina's lithium production capacity. Although the new capacity will not be put into use immediately, the increased certainty of future supply will undoubtedly further increase the downward pressure on lithium prices.
The downward trend in lithium prices caused by excess capacity has not yet ended. Argentina, a South American lithium exporting country, will have four new lithium mine projects put into operation in the short term. The surge in supply encountering sluggish demand means that the continuously falling lithium price may worsen.
According to media reports on Saturday, four new lithium mine projects in Argentina will be put into operation one after another in the coming weeks to months. This will almost double Argentina's lithium production capacity and further consolidate its position as a major lithium producer in the world. After the four new projects are put into operation, Argentina's annual production capacity will increase by 79% to reach 202,000 metric tons.
Despite the large amount of capital poured into Argentina's rich lithium mining industry over the past decade, only one new lithium mine has been put into operation in the country. However, the newly-elected Argentine government led by Milella is accelerating the development of lithium mining resources and promoting lithium exports to boost the economy.
These new projects on the salt flats of the Andes Mountains in the South American "Lithium Triangle" region are crucial for new president Javier Milella to obtain foreign exchange, as he urgently needs to increase export earnings to obtain US dollars and boost the Argentine economy to achieve his reform goals.
Several Chinese miners will be responsible for the development of these new lithium mines. Centenario Ratones, jointly participated by China's Qingdao Lushang Group and French miner Eramet SA, will hold a commissioning ceremony next week. The other three projects are Zijin Mining's Tres Quebradas, Ganfeng Lithium's Mariana and South Korean steel giant Pohang Iron and Steel Holdings' Sal de Oro.
However, for the global lithium market, the emergence of these additional capacities comes at a time of low demand. Lithium inventories are accumulating as the prospect of demand for electric cars is unclear. The spot price of Chinese lithium carbonate has fallen to the lowest level since August 2021. Rio Tinto Group also plans to build a mine with an annual output of 3,000 tons in Salta Province, Argentina by the end of this year.
Although the added capacity will not immediately be put into use entirely, the certainty of future supply increases will undoubtedly further increase downward pressure on lithium prices. According to media estimates, global lithium production this year will reach 1.4 million tons. Miners involved in these projects need to cope with the challenges of imbalanced lithium supply and demand.
