South America's abundant lithium resources have triggered an investment boom

South America has long been not a hotspot for industrial investment
.
When companies invest in South America, their main purpose is to penetrate the local market, rather than integrate it into global trade networks, which is very different
from the situation in Asia.
However, in the recent booming battery market and rising global lithium prices, South America, which is rich in lithium resources, has become a hot spot for investment, and a large amount of capital is pouring into this region
.

Global demand for lithium is growing rapidly

Driven by the battery market, global lithium demand has grown
significantly in recent years.
Lithium mainly exists in the form of lithium carbonate and lithium hydroxide, and is mainly used in lithium-ion batteries for cathode materials, and can also be used for electrolyte and anode materials
.
Based on lithium, global lithium consumption was 79,400 tonnes in 2020, and based on lithium carbonate equivalent (LCE), global lithium carbonate consumption in 2020 was 422,300 tonnes
.
In 2015, the global lithium consumption was only 33,600 tons, and the average annual growth rate in 2016~2020 reached 27%.

Standard & Poor's Global pointed out that the growth rate of global lithium consumption is still accelerating, and global lithium demand is expected to reach 215,900 tons in 2025, with an average annual growth rate of 34%.

The key to growing demand for lithium lies in batteries
.
Standard & Poor's Global said the share of lithium consumed in battery production in global lithium consumption has increased from 48 percent in 2015 to 67 percent in 2020 and is expected to reach 88 percent
by 2025.
In 2020, electric vehicles accounted for 72% of the lithium-ion battery market, and the energy storage sector accounted for only 5% of the global lithium-ion battery market, but this field is growing rapidly
.

South America is rich in lithium resources

In the context of the rapid development of the battery industry, South American countries with abundant lithium resources have received more attention
.
According to U.
S.
Geological Survey estimates, Argentina, Bolivia and Chile have large amounts of lithium under the salt lakes, also known as the "lithium triangle"
.
The lithium resource development potential in the "lithium triangle" area is huge
.
As of 2021, the total lithium resources of Argentina, Bolivia and Chile are 49.
8 million tons, accounting for 62.
7% of the world total, and the proven reserves are 11.
4 million tons, accounting for 51.
8% of
the world's total proven reserves.

Of the three countries, Chile has the most developed lithium industry and has been a major lithium producer in the world since the 90s
.
As of 2021, Chile has a total lithium resource of 9.
8 million tons, of which proven reserves reach 9.
2 million tons
.
In terms of lithium production, Chile's lithium production has grown steadily over the past few decades, from 5,300 tons in 2000, 10,500 tons in 2010, 21,500 tons in 2020 and surging to 26,000 tons in 2021
.

Argentina's total lithium resources are much larger than Chile's, totalling 19 million tons
as of 2021.
However, Argentina's lithium resources are far less developed than Chile's, with proven lithium reserves of only 2.
2 million tons as of 2021, but a lot of exploration work is underway
.
Argentina's lithium production is also nowhere near Chile's, rising from just 200 tonnes in 2000 to 2,950 tonnes in 2010 and 5,900 tonnes
in 2020.

By comparison, Bolivia has the world's largest lithium resources — 21 million tons, or 26 percent of the world's total, according to the U.
S.
Geological Survey, but development has only just begun
.

Capital expansion has begun

At present, with the increasingly prominent resource advantages of South America, domestic and external capital has stepped up investment and development in the local area, mainly Argentina and Bolivia with large development potential
.

Chile, which has developed lithium resources earlier and is more mature, currently has two lithium chemical producers
.
According to S&P Global, SQM is Chile's largest producer of lithium chemicals with a capacity of 82,000 tonnes of LCE/year
.
Albemarle is the second largest producer with a capacity of 59,000 tons of LCE/year
.
Currently, both producers are investing in capacity expansion, with SQM planning to expand production capacity to 182,000 tonnes of LCE/year and Yabao planning to expand capacity to 99,000 tonnes of LCE/year
.

In Bolivia, the state-owned enterprise Yacimientos de lilio Bolvianos (YLB) was established in 2017 to advance a $2.
3 billion project that includes a 15,000 mt/year lithium carbonate plant and a 350,000 mt/year potassium chloride plant
.
The lithium carbonate plant is scheduled to start production
by the end of 2022.
Bolivia's lithium industry started slowly, partly reflecting the nature of
its brine.
Compared to brine in Chile and Argentina, brine in Bolivia has a lower concentration and deeper
depth.
The country is also landlocked and has underdeveloped infrastructure, creating obstacles
to investment.

In Argentina, investment activity is in full swing
.
Currently, two companies producing lithium chemicals in Argentina, namely Canada's Livent and Australia's Allkem, have started capacity expansion projects
.
Livent's Fenix project began operations in 1997 and currently has a capacity of 26,000 tonnes of LCEs/year, but in March this year, the company announced a $1.
1 billion project to increase its capacity to 60,000 tonnes of LCEs/year
.
Allkem's Olaroz plant has been in operation since 2014 with a capacity of 17,500 mt/year and will be expanded to 42,500 mt/year by the end of 2022, with additional capacity
to be added over the next two years.
The total investment in the project is estimated at $425 million
.

A number of new lithium production projects are under construction in Argentina
.
France's Eramet, which began exploring suitable brine deposits in Argentina about 10 years ago, has resumed its $600 million investment in Centenario The Ratones Project
.
Earlier this year, the company began construction of a 24,000-tonnes LCE/year plant
.
Lithium, Canada Americas and China's Ganfeng Lithium are building a $741 million project
in Cauchari-Olaroz, Argentina.
In the first phase, a capacity of 40,000 tonnes of LCE/year is scheduled to start operation in 2023; In the second phase, 20,000 tons of LCE/year production capacity
followed.
In addition, 4 other lithium projects in Argentina are under construction and about 60 projects are in the pipeline
.