In 1960, several the world’s leading oil producing nations decided to band together to protect their natural bounty and to provide them with better control over the market.
Led largely by the giant Middle Eastern oil reserve holders, the Organisation of the Petroleum Exporting Countries (OPEC) has become the key player in the global oil market.
While hydrocarbons still dominate the world energy equation, in recent years, lithium (aka “white oil”) has grown to a position where analysts are predicting the battery metal will also become one of the key energy sources of the future.
Now, a group of some of the world’s largest lithium reserve holders are again reported to be pushing to create a “South American OPEC”.
For several years there were rumours that the so-called “Lithium Triangle” nations of Argentina, Bolivia and Chile have been pulling together to create their own lithium coalition. The three nations account for around 67% of the world’s lithium reserves.
COVID-19, geopolitical, and local issues have stalled the “OPEC” style move, but some members of the triangle are openly discussing the potential to create the all-powerful South American Lithium Coalition.
Recent reports suggest that Brazil, Mexico, and Peru, while not having the lithium riches of their neighbours, are also keen to participate in a South American OPEC.
The Strategy Centre says the countries must make a real focus bargaining of beneficial prices as a block. CELAG recently released a report on lithium market potential in the region – a paper aimed at providing systematized information on the legal, economic, and geopolitical situation of lithium in the region.
The report noted that the region has a major percentage of the world’s known lithium reserves with Bolivia containing 21Mt, Argentina (19.3Mt), and Chile (9.6Mt).
The paper found that of the countries in the region, Chile is the one that has made the most progress in its extraction and export. It is positioned as the second global producer (22%), behind Australia (48.8%), and followed by China (17.1%).
CELAG said that in Bolivia, Brazil, Chile, and Peru, lithium is defined as a strategic resource, and Mexico is in the process of approving this strategic classification through a constitutional reform.
The Argentine government has declared itself in favour of specifically regulating this mineral. Only Bolivia and Chile have some specific regulations on lithium, in the rest of the countries addressed the regulation related to lithium is of a general nature.
CELAG has proposed a two-staged process in the short and mid-term. In the short term, the countries must sign a foundational treaty, where basic strategic goals and rules as well as coordination and communication points are set.
In the mid-term, the countries should sign a new treaty to create a permanent UN-approved organism that coordinates the region in the form of a cartel, much like OPEC. This treaty would not require constitutional modifications, so it would not interfere with the sovereignty of the various states.
Bolivian moves
Ex-Bolivian Minister, Hugo Moldiz Mercado, recently confirmed that Bolivia, Peru, Argentina, Chile, and Mexico are studying the possibility of combining efforts and building an agreement on the potential coalition.
“These countries could establish something like OPEC for lithium, but that is still a possibility. However, the negotiations between these countries are at an initial stage yet,” he told a press gathering.
“There is a concrete challenge towards creating agreements around lithium,” he added.
Peru’s battery hopes
While Peru has no lithium production to date, the country is keen to ensure it plays a role in the future electric vehicle (EV) battery market boom.
Jaime Chavez, Peru’s vice minister of mines, recently told a local mining conference that the nation is targeting the production of lithium batteries domestically.
“We are already starting to act to see if we can develop a battery industry,” he said.
A leading Peru global copper producer, the nation’s lithium future is looking positive with Canada’s Lithium America Corp. (TSXV: LI) making strong progress at its advanced-stage Falchani project is the sixth largest hard-rock lithium deposit in the world.
The company recently commenced an Environmental Impact Assessment (EIA) hydrology drilling programme at the wholly owned Falchani lithium project in Southern Peru.
Chile is positioned as the second global producer (22%), behind Australia (48.8%), and followed by China (17.1%)
The company also announced it had engaged DRA Global and Stantec Inc. to jointly produce an updated Preliminary Economic Assessment (PEA) for Falchani. The updated PEA will focus on incorporating Sulphate of Potash (SOP) and Caesium (Cs) by-products, the material increase in lithium carbonate (LCE) pricing and the results of the current drilling.
The EIA hydrological study diamond drilling programme consists of 10 vertical holes up to 150m depth within and adjacent to, the Falchani resource footprint. The programme includes installation of downhole piezometers to monitor water table and local groundwater parameters.
Parallel with the EIA work, the company remains focused on launching its planned infill and expansion drilling in and around the Falchani Deposit as final permits are received.
“We are very excited to be diamond drilling again at Falchani for the first time since before COVID-19. We are also pleased that this work and other recent successes will allow DRA Global to update the Falchani PEA,” Simon Clarke, CEO of American Lithium, said.
“We anticipate this update will build on and improve the already robust economics of the original PEA and will further highlight the quality and scale of this large lithium deposit.”
Argentina activity
Argentina Lithium & Energy Corp. (TSXV: LIT) has recently received positive lithium brine values from the second diamond drill hole at its Rincon West Project in Salta Province, Argentina.
The Rincon West project covers 2,951.5ha of the salar basin, located west of the adjacent Rincon Project owned by Rio Tinto. The property is currently permitted for up to nine exploration drill holes. The fourth exploration hole is currently in final steps to completion. The brine analytical results from the second hole have been received and are reported below.
“The results of the second exploration hole demonstrate remarkably consistent lithium grades, when compared to the first,” vice president of exploration, Miles Rideout, said.
RW-DDH-002 results reveal an impressive, concentrated brine aquifer, tested with packer sampling over ~77% of the interval between 182 and 305m depths, with lithium values ranging from 337 to 367mg per litre.
“Additional concentrated brines with lower lithium contents were also recovered from above this 118m interval.
“Drilling thus far validates that the adjacent lithium salar extends under our properties, with consistently high lithium grades. The drill programme will continue as planned with the aim of delineating an initial lithium mineral resource.”
YPF battery metal hunt
Elsewhere, Argentina’s State-run mining firm YPF has commenced exploration work on a 20,000ha area lithium prospecting project in Fiambala in the country’s western Catamarca province. The company has also expressed interest in investigating a domestic lithium battery opportunity.
