The Lithium Triangle: Growing foreign investment in the region

This article is part of a special report on the Lithium Triangle. You can read the other two parts here and here.

The price of lithium is falling, but some Western companies have recently announced more investments in the Lithium Triangle – a region of South America comprising parts of Argentina, Chile and Bolivia.

Overall, brine demonstrates the cost advantage in producing lithium carbonate while, with the exception of the Greenbushes mine in Western Australia, integrated spodumene suppliers have higher costs.

At current spot lithium salt and spodumene prices, the industry is moving fairly deeply into the cost curve. It is not only the weak price, but also the weaker demand outlook, that is causing a broad-based review, with some entities along the supply chain scaling-back their production, or rethinking investment schedules and plans.

Rio Tinto has signed a definitive agreement to acquire Arcadium Lithium. The agreement, valued at about $6.7 billion, has been unanimously approved by both companies’ boards of directors, and is expected to close in mid-2025 subject to an Arcadium shareholders’ vote.

Arcadium Lithium was formed from a merger of Allkem and Livent in January 2024 and has capacity for 75,000 tonnes per year of lithium carbonate equivalent (LCE) across all of its products.

Meanwhile, Rio Tinto, until now, has been a relatively small participant in the lithium sector, with a number of assets in the pipeline. These assets include the Rincon project in Argentina, which will use direct lithium extraction (DLE) technology to produce 3,000 tpy of lithium, set to begin production this year.

The merger of the two companies creates an environment in which Rio Tinto can leverage Arcadium’s lithium expertise. This is particularly in the field of DLE, where Arcadium has been a long-standing participant through its Salar del Hombre Muerto project, one of the highest grade lithium projects in Argentina.

“It’s good to see that Western companies are investing and interested in Argentina. We need Western companies here to balance China’s influence and show that Western companies are growing in lithium production,” a source told Fastmarkets.

“A deal like this, with a counterparty of Rio Tinto’s stature, shows that the lithium market is reaching a key level of maturity in its evolution,” a consumer said to Fastmarkets.

Separately, Paris-based minerals firm Eramet announced the buy-back of Tsingshan Holding Group’s 49.9% stake in Eramine Sudamerica, effectively regaining full ownership of the Centenario lithium project in Argentina.

The plant will begin production in the coming weeks, the company said.

The purchase of Tsingshan’s stake in the Centenario project is interesting in several ways, Fastmarkets’ head of base metals and battery research, William Adams, said.

“The decision to regain full ownership of this project shows that a Western miner is still confident in the project despite the current weak prices, and why wouldn’t it be?” Adams said. “The oversupply and price weakness are temporary, the world is going down the green transition route, and as more things are electrified or more renewable power generation is added, demand for energy storage is only going one way.

“The bigger the whole industry becomes, the harder it will be for producers to keep up with demand,” he added. “Western companies need to compete with Chinese companies to ensure sovereignty. This deal increases Western sovereignty as well as giving Eramet full control over how the operation expands.”

Trump effect

Participants in China’s electric vehicle (EV) and battery industries expect more uncertainty under a second Donald Trump presidency of the US, because of the president-elect’s stated intention to scale back the country’s Inflation Reduction Act (IRA) and to pursue expanded protectionist trade policies.

Trump’s election victory over incumbent Vice President Kamala Harris on November 6 potentially means a different approach to EVs compared with that taken by current President Joe Biden, complicating the process of electrification, industry sources said.

Throughout his campaign, Trump made it clear that he is not a fan of battery-electric vehicles, instead vowing to boost fossil fuels and internal combustion engine (ICE) vehicles.

Fastmarkets’ research team forecasts that EV sales in the US will reach 9.55 million units by 2034 under a Trump presidency, 5% lower than forecast for a Harris-victory scenario during the same period.

“Trump’s policies will focus more on traditional energy sources, such as oil, coal and gas,” one producer said. “Trump is not a fan of renewable resources, so we think the result is bearish for the markets.”

Albemarle believes that it is still too early to discuss what the second Donald Trump administration may do to the lithium industry, Kent Masters, the lithium producer’s chairman and chief executive officer, said during the company’s earnings call on November 7.

“The energy transition is kind of a global phenomenon that is happening,” he said. “It’s really driven first by China. Europe is probably the second-largest market in that, and then North America. And I don’t want to speculate on what a Trump administration might do.”

Masters also said that “our strategy had been to pivot to the West. We’ve kind of backed off, given that prices have been so low and [because of the] economics of building-out that supply chain in the West. We still hope to do that, but we have to wait and see what the Trump administration wants to do.”

US investment in the region

According to Fastmarkets’ research team, there are more than 110 lithium mines in Argentina and Chile. Only two are owned by US companies, while the others have mainly Canadian, Chinese and Australian ownership. The same applies to lithium concentrators.

“The future presence of US companies is really challenging in Argentina and Chile,” Fastmarkets battery raw material analyst Atanas Atanasov said. “Maybe they have to focus on lithium concentrators because building is faster, and because acquiring an advanced-stage lithium mine is quite expensive. And in general, of 100 lithium advanced-stage mines, only 4-5 have been acquired by other companies.”

Meanwhile, in the context of the Inflation Reduction Act, our analysts believe that, over time, the US will forge other special trade agreements with non-free trade agreement (FTA) countries, such as Argentina, because there is a growth in mine and processing supply from countries that are not FTA partners, but which are also not foreign entities of concern (FEOC) as defined by the Act.

“With Chile as an FTA-partner country, we see huge opportunities for Chile to increase its sales to the US market,” Adams and Amy Bennett, principal consultant of BRM Research, said.

“On the other hand, China is continuing to expand its footprint in developing lithium provinces, including Argentina and Bolivia, as well as its mid- and down-stream processing and manufacturing industries,” they added.

“Chinese involvement in lithium projects in Argentina leaves lithium from the country on a more questionable status, because Argentina currently is not a US FTA-partner nation. On the other hand, we believe that, as long as joint ventures between China and non-FTA countries ensure that the Chinese equity is below 25%, then that material might be IRA-compliant,” they said.

But the definitions of IRA-compliant lithium have yet to be clarified. Market participants are not sure what is required for lithium to be IRA-compliant.

Besides, Trump has said that he plans to repeal the IRA, at least partially, and rescind its unspent funds.

He has not specified which programs he plans to target, but it is safe to say that with Trump elected the 47th President of the US, the centerpiece of incumbent Joe Biden’s economic achievements is set to undergo some changes.

“With the election of Trump,” Bennett said, “we would expect that any IRA money that has already been spent is safe, but any undelegated funds are likely to be rescinded.”

Current lithium pricing

Fastmarkets assessed the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, cif China, Japan & Korea, at $8.50-10.00 per kg on Thursday November 21, up by 5.71% from $8.00-9.50 per kg the previous day.

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, stable on Thursday at $10.80-11.40 per kg, unchanged since Tuesday.

This article is part of a special report on the Lithium Triangle. You can read the other two parts here and here.

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