The Chilean Copper Commission (Cochilco) has forecast a growing lithium supply deficit over the next decade, while the country expects to lose market share to Argentina by 2035.
According to Cochilco, Argentina will surpass Chile as South America's biggest lithium producer by 2035. The state-run entity expects Argentina's annual output to climb to 415,000t, from the current 28,000t.
Chile would fall from the second to the third-biggest global lithium producer in 2035, with a difference of 79,000t, Cochilco said.
Argentina was the fourth-biggest lithium producer in 2022, according to the US Geological Survey. It is second worldwide for lithium resources, with 20mn t.
The potential decline was attributed to a lack of planning from previous governments. "As a state, we are behind in lithium strategy and policy. We should have invested in exploration much longer ago and made some strategic decisions a long time ago," said Chilean mining minister Marcela Hernando.
Market deficit looms
Cochilco expects global lithium carbonate demand to reach 3.8mnt from 508,000t in 2021, bolstered by the need for lithium-ion batteries as the world moves to meet net-zero goals.
Global lithium production will also increase, but not enough to meet demand, Cochilco anticipates. It will reach 2.46mn in 2035, 13pc up from the 468,000t in 2020.
"This is driven by the materialisation of new projects, which would contribute 55pc of mine production by 2035," said Cochilco's director of studies and public policy, Victor Garay, expecting the gap to narrow by then.
The market has been tight since 2021, with slight deficits that will persist until 2024, Garay said. "This implies that any disruption in the supply of existing operations or delays in new projects and expansions will cause temporary shortfalls," he said. "From 2027 the deficit will intensify."
Chile, which is located in the ‘lithium triangle' alongside Argentina and Bolivia, is home to 36pc of world reserves. Its production in 2022 represented 34pc of worldwide output. But this figure could shrink to 15pc in 2030 Garay said, owing to a lack of planning.
Negotiations with the private sector
The forecast comes at a time when Chile is in conversations with private-sector company Sociedad Quimica y Minera (SQM) to nationalise the mineral in the Salar de Atacama region, which holds 90pc of the country's lithium reserves. The Chilean government announced on 20 April that it aims to take a majority share of lithium operations in the country. Both parties formally started discussions last week.
Chile's state copper company Codelco hopes to reach an agreement this year with SQM on renegotiating its lease to mine lithium in the Atacama salt flat, Maximo Pacheco, chair of Codelco, said on 26 May. The negotiations apply to SQM's current lease until 2030 and any future leases.
According to the government, Albemarle, the only other companies authorised to produce lithium in Chile, has also verbally stated its interest to start negotiations as soon as possible.
