Fever for the new “white gold”

Salt pans in Salta, Jujuy and Catamarca are being scoured by numerous projects at different stages of development which promise to attract significant investment to the region.

The provinces of Salta, Jujuy and Catamarca in northwest Argentina make up the country’s lithium triangle. More than ten companies are exploring for the mineral and two have already begun production.

One of the most important developments was the announcement of the construction of the Olaroz lithium mine, a move which was welcomed by President Cristina Fernandez de Kirchner herself. She not only applauded the multimillion dollar investment by Sales de Jujuy (valued at US$276 million), but also the participation of the provincial government in the project through state-owned mining and energy firm JEMSE with an 8.5% stake.

The mine is expected to begin operations in 2014 and will reach its capacity of 16,400 tons a year of lithium carbonate (99.5% purity) and 10,000 tons a year of potassium chloride from 2016. It will have a mine life of forty years.

The project will create 120 direct jobs during the construction phase, 80 of them from the town of Susques and 40 from the rest of the country. Another 400 will be employed through contractors. “During the production stage, it will create 180 direct jobs, of which 100 will come Susques, 50 from Jujuy and 30 from the rest of the country; plus another hundred through contractors,” says Carlos Maria Navarro, the province’s secretary for mining and hydrocarbons.

Local mining authorities highlight the development of lithium in Jujuy’s Andean highlands. According to Navarro, “the province has several projects at different stages of development to exploit lithium, potassium and other elements contained in the brines on the salt-flats.”

Another project at an advanced stage of analysis and evaluation is being developed by Exar S.A. to produce lithium carbonate from brines from the Cauchari-Olaroz salt pan in the Department of Susques. The project will be implemented in two stages: the first, to produce 20,000 tons a year of lithium carbonate, will require investment of close to US$220.75 million. The second stage will lift production to 40,000 tons a year, from 2018, while doubling the investment seen in the first stage.

Both projects are located no more than 280 kilometers from San Salvador de Jujuy at an altitude of around 3,700 meters above sea level.

“There are other projects which are still being explored in the salt pans and brines in the Departments of Susques and Tumbaya. We can see that Jujuy will develop significantly based on these mine projects,” Navarro explains.

Ten companies are exploring for lithium in the Province of Salta. ADY Resources is carrying out advanced exploration and has begun small-scale production at the Salar del Rincon, while FMC-Minera del Altiplano produces lithium chloride at the Department of General Güemes, using raw material extracted from the Catamarca half of the Hombre Muerto salt pan.

According to mining data, 510 concessions have been granted to mine lithium in Salta in 13 salt pans which cover a surface area of 3,522 square kilometers. “Right now I can say that 100% of the salt pans are covered with mine concessions,” says Ricardo Salas, Salta’s mining secretary.

FMC Minera del Altiplano y Lithium 1 SRL: FMC Minera del Altiplano is exploiting lithium salts on the Hombre Muerte salt pan. Canada’s Lithium One Inc. announced the acquisition of mine concessions for large areas in the north and east of the salt pan and plans to make rapid progress on the other stages of the project in order to take a decision on its economic viability as soon as possible.

Ady Resources Limited: The company will invest more than US$300 million in the Salar del Rincon to build three plants to process lithium, borate and sodium sulfate ores. The project will create 250 permanent jobs. The company has now completed the first stage of construction of a plant to produce 1,200 tons a year of lithium carbonate in the deposit itself, which is now in production. It is also investing at Salar del Rincon to produce sodium sulfate, one of the raw materials used in the production of lithium carbonate.

Lithea Sucursal Argentina y Ekeko S.A.: Lithea Sucursal Argentina is carrying out exploration on the Pozuelos salt pan, including assays on the chemical and physical character of the natural brines as well as drilling to extract brine samples at depth and is studying the influence of evaporation. Lithea owns the project while Ekeko SA is managing the exploration stage. Lithea is the only company which owns the whole of a salt pan in the Argentinean highlands which is not inhabited or located near indigenous communities.

South American Salars S.A.: Orocobre-South American Salars is exploring the Salinas Grandes salt pan and is continuing exploration at depth to define the characteristics of the brine at these levels. It owns concessions on the Pocitos salt pan where it plans to begin exploration to define its economic potential for lithium and potassium minerals. This salt pan has been mined in the past for sodium sulfates.

Compañía Minera Solitario Argentina S.A.: Solitario Argentina S.A. is exploring the Llullaillaco salt pan and has carried out surface and underground studies in order to define the potential for lithium, potassium and borates.

BHP Billiton World Exploration Inc., Latin American Minerals Argentina S.A. –Exar- y Lacus Minerals S.A. The Arizaro salt pan is the largest in the Province of Salta and has attracted interest from numerous mining companies which are carrying out surface and underground exploration to define its mineral potential. BHP Billiton, Latin American Minerals and Lacus Minerals are among the companies to hold concessions there.

Potasio y Litio de Argentina S.A. (Rodinia Minerals) and Bolera Minera S.A. Through its subsidiary Potasio y Litio de Argentina S.A., Rodinia Minerals is exploring its concessions on the Diablillos, Ratones and Centenario salt pans. The results obtained at Diablillos have allowed the company to define a zone measuring 2.5 kilometers by 4 kilometers with high grades of lithium and potassium close to the surface. Based on these values, the company is continuing with a program of diamond drilling at depth.

Meanwhile, Bolera Minera S.A. is carrying concentration tests and geophysical work in another part of the salt pan and expanded its geophysical work on the Centenario and Pastos Grandes salt pans. ADY Resources and other local firms also own concessions on the Pastos Grandes salt pan.
Between 2010 and 2012, companies invested US$107 million in exploring for lithium in Salta. And while Jujuy has JEMSE, the Province of Salta has REMSA which owns a number of mine concessions and also forms alliances with private sector firms. “It has no exploration areas and we are working to strengthen its portfolio. But we want to do so in the same conditions as the private companies,” says Ricardo Salas. REMSA owns lithium deposits on the Salinas Grandes, Hombre Muerto and Arizaro salt pans.

The Province of Catamarca is home to one company which produces lithium carbonate and two exploration projects. One of these belongs to Lithium 1. Located in Sal de Vida, it is currently at the final feasibility stage, “and there is another company which is in reserve and we are not going to reveal it yet,” says Rodolfo Micone, the province’s mining secretary. “We have high hopes for lithium. They are not many countries which have the reserves we have so we have to study the market very well,” he adds.

Minera del Altiplano S.A. (MdA) has been producing lithium since 1997 from its deposit on the Hombre Muerto salt pan. The initial inversion was around US$150 million. “We are operating the plant with 256 permanent employees and around 30 service contractors. We hope to have a permanent workforce of around 307 by the beginning of next year,” comments board chairman Daniel Chavez Diaz. MdA works with more than two thousand local suppliers which receive annually around US$36 million, a figure which fluctuates with annual production. Almost all output is exported to the United States, the United Kingdom, Germany, China and Japan.

MdA plans to increase mining capacity by 30% with a corresponding increase in lithium carbonate production, and to build a potassium chloride plant with capacity to produce 54,000 tons a year. This will require an investment of US$55 million. Construction could be completed during 2013.

South American Salars (SAS) is an Argentinean company focused on exploring parts of the country with potential for lithium or potassium. “The first project we developed was in the Olaroz salt-flat; the areas were purchased in 2004 and in 2006, Orocobre Limited was convinced to put up the funds necessary to finance exploration and today this Australian company has become a new supplier of lithium to the world market,” says the geologist Miguel Peral, director and manager of SAS.

Following its success and using its acquired knowhow, SAS has decided to explore other parts of Argentina. It has acquired more than 300,000 hectares of mine pediments in seventeen salt pans located in the provinces of Salta, Catamarca and Jujuy, of which the two most advanced are Cagrejillo in Salta and Cauchari in Jujuy.

The company is currently planning to take Congrejillo to the prefeasibility study for which it is currently digging large diameter wells. This type of work will allow the company to visualize the extractability of the brines, its seasonal variability and its geochemical behavior over time. “Cangrejillo has inferred resources of 56.5 million cubic meters of brine, grading 796mg/l of lithium and 9,550mg/l of potassium, the equivalent of 239,200 tons of lithium carbonate (44,960 tons of lithium metal) and 1.03 million tons of potash (KCl – equivalent to 539,850 tons of potassium) at an average depth of 13.3 meters. The bucket was sunk to a depth of 400 meters so the remaining meters will have to be studied in the future,” the executive explains. Based on this data, the company predicts initial annual production of 10,000 tons of potassium chloride and between 2,000 and 5,000 tons of lithium carbonate a year for more than twenty years.
The provinces of northeast Argentina are wagering heavily on lithium.

Chile defends its leadership
Argentina is not only the country in the race to develop its lithium potential. Chile, the world’s leading producer of the mineral, is currently promoting its Special Operating Lithium Contracts (or CEOL, from its initials in Spanish).

Despite the abundance of lithium in the salt pans of northern Chile, currently just two companies produce this mineral: SQM and SCL (Chemetall). This is due to the fact that lithium was declared a strategic resource – due to its use in nuclear reactors – meaning it could not be granted through concession. However, this situation will change with the launch of the CEOLs.

Chile’s Deputy Mining Minister Pablo Wagner explains: “we have to launch a process that is open to all, transparent and which allows us also, from the point of view of the state, hopefully in partnership with Codelco, to explore for and produce lithium, but we can also do it with third parties, if that’s more competitive, because if we don’t do anything, other countries are going to seize this opportunity,” he warns.

The CEOLs preserve the dominion of the Chilean state over the land but grant a concession to explore for and produce up to 100,000 tons of lithium over twenty years. The Chilean government expects to earn US$350 million through the mechanism, via taxes on corporate profits and a 7% royalty on production.

According to the government’s timetable, both administrative and economic offers must be presented by September 12th with the winning bids being announced on September 24th.

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