Lithium mining companies have swept into Brazil's southeastern Minas Gerais state, hoping to meet demand for the mineral which has soared in the context of demand for renewable energy.
An essential part of electrical vehicle (EV) batteries, lithium demand could increase by over 40 times by 2040 according to the International Energy Agency.
Almost all Brazil's official reserves are concentrated in the Jequitinhonha Valley, in Minas Gerais, with some newer finds in the northeast, Brazil's mines and energy ministry has said. But Minas Gerais continues to attract the most interest.
Lithium mostly comes from salt brine or hard rock. Brines are more common in the "lithium triangle" of Argentina, Bolivia and Chile, while hard rock is primarily sourced from Australia, China — and now Brazil.
Brazil holds an estimates 730,000 t of lithium reserves, far lower than the top holder of Bolivia with 21mn t. But Brazilian officials argue they are of a particularly sought variety.
"Lithium found in Minas Gerais is of high purity, facilitating its use in the manufacture of more powerful batteries," according to Brazil's mines and energy ministry. The ministry also points to a more water-efficient extraction model for hard rock than for brines.
The Brazilian Company for Lithium (CBL) has been producing lithium concentrate (spodumene) since 1991, supplying the national demand for the mineral. But recently about half a dozen new companies have arrived to the area.
Sigma was the first to start exporting the mineral in April this year. During its first phase, the company expects to produce 270,000 tons/yr of 5.5pc green lithium concentrate. Annual production is set to double by 2024, and Sigma recently increased its reserve estimate by 25pc to 110mn tonnes.
Atlas plans to produce 300,000 t of spodumene concentrate a year in a project to be implemented in the coming two years, with a full ramp-up of production by 2025. Latin Resources is aiming for production to come online in 2026, and Lithium Ionic around the same time.
Jequitinhonha Valley is one of Brazil's most impoverished regions, creating an incentive for production. Mines and energy minister Alexandre Silveira is making the case that lithium mining will remake the long-neglected region into a "valley of opportunity."
In May, Minas Gerais governor Romeu Zema and Brazilian federal officials visited New York as part of the "Lithium Valley Project" to seek international investment.
"The lithium valley project is necessary for exposure outside of the Brazilian market," said Tadeu Barbosa, the mayor of one of Jequitinhonha valley's largest towns, Aracuai.
A bill moving through the Minas Gerais state assembly would also allow the executive branch to create a special tax regime for lithium mining companies in the area.
But CBL's chief executive Vinicius Alvarenga said that attracting foreign investment is not the main hurdle.
The Jetinquinhona valley needs to develop "know-how, technology, available and cheap logistics and electricity, and locally available trained labor," Alvarenga said. Highly qualified labor such as engineers and geologists are not lacking, but welders, electricians and mechanicians are, Alvarenga added.
Long hauls
Infrastructure is one of the main difficulties that could hinder production. The area is relatively isolated, far from Brazil's economic hubs such as Sao Paulo. Export of the product depends on roads, often in poor condition. The most competitive port is Vitoria in Espirito Santo state — a 12-hour, 600-kilometer drive.
Earlier this year, the company MTC Multimodal Caravelas received authorization to rebuild a freight railway between Aracuai in Minas Gerais and Caravelas port in Bahia state. The company is seeking to expand the line to Salinas, to the west of Aracuai. The line will be used to export lithium but also eucalyptus, quartz and iron ore.
"I have seen a lot of speed in the decision-making process regarding this trainline," Barbosa said. "Because of the issue with our roads, we depend on it."
Some area communities are eyeing the lithium boom with suspicion, which could hinder environmental licensing. The Poco Dantas village near Sigma's Grota do Cirilo project complains of constant noise, cracks in residents' houses and dust from the mine causing health problems.
Pushback from nearby communities resulted in the repeal of a Sigma permit to research lithium deposits in the Chapada do Lagoao, an environmentally protected area outside of Aracuai. Officials in the region, such as Barbosa, are also pushing for the development of the EV supply chain in Brazil — particularly the construction of batteries. But in a country that has prioritized biodiesel, it remains to be seen whether this push will be successful.
