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While Argentines manage the effects of a prolonged economic crisis and the country’s poverty rate rises past 50 percent, the long anticipated boom in lithium production in Argentina’s northern Andean provinces finally appears to be taking shape. The country has at least four active lithium operations, two more expected to reach production by year’s end and at least 40 additional mines in various stages of construction. How will Argentina’s lithium industry shape the country’s economic growth and recovery? What are the medium- to long-term outlooks for investors in lithium projects in Argentina? How has President Javier Milei’s government managed the lithium industry differently than the previous administration?

Juan Cruz Díaz, managing director at Cefeidas Group in Buenos Aires: “There is broad political consensus at the national level in Argentina on promoting mining as a key industry to unlock the country’s economic potential. Since the provinces own natural resources, subnational governments are responsible for granting concessions and approving mining projects, making them crucial in fostering this activity. Although mining’s share of national exports remains relatively small, the significance of the lithium sector for provinces like Catamarca, Salta and Jujuy—where production is concentrated—lies in its potential to create jobs and spur growth in other industries along the value chain, such as construction and services. The government remains optimistic about the future, particularly with expectations of rising lithium prices and growing global demand fueled by the energy transition. Positive developments, such as the new Eramine plant coming online, Rio Tinto’s acquisition of Arcadium Lithium and fresh investments from Ganfeng Lithium, further bolster this outlook. While the Milei administration’s pro-business stance has led to the approval of the Incentive Regime for Large Investments (RIGI) and other deregulation measures, foreign investors still face significant challenges, particularly regarding foreign exchange restrictions. Expanding the lithium export sector could help alleviate these issues. However, as these projects typically have long-term timelines, it remains uncertain how the government will secure the necessary influx of foreign currency to lift restrictions, attract further investment and revive economic activity.”

Jennapher Lunde Seefeldt, associate professor of government and international affairs at Augustana University: “There are complexities unique to Argentina’s lithium industry that will shape its development and success. Milei’s approach courts foreign investors with deregulation, tax incentives and promises of contract stability. However, Argentina is notorious for its intricate and varying tax schemes and logistical difficulties with importing extraction equipment, leading to slower development. Federalism has also been a thorn in investors’ sides, as companies must navigate the central as well as provincial mining laws. Milei has allowed provinces greater freedoms in property takings, but governors are still keen on maintaining their autonomy. Civil society organizations have increased their challenges to these operations’ presence in and damage to the local environment. Argentina’s pendulating ideological history also threatens investment outlooks. Riding a familiar wave of economic discontent, Milei called for increased austerity and neo-extractivism. This will likely exacerbate economic woes, which in turn will worsen social stability. It would be a mistake for Milei, provincial governors and investors to ignore local populations’ demands for representation, inclusion and environmental protections (see the Salar de Hombre Muerto case). Milei and investors would be wise to diversify Argentina’s production beyond raw material extraction to supplying value-added products. This may increase capital and lessen the likelihood of others exploiting Argentina in the typical north-south divide. Opening the industry to more investors (China currently dominates) has the potential to benefit Argentina and the global demand for lithium, but if Milei cannot provide for citizens, respect provincial authority, and spur sustainable development and extraction, benefits for all will be short-lived.”

Daniel Monzon, partner at Arthur D. Little in Buenos Aires: “The lithium boom represents increased economic activity, particularly at the regional level, and greater government income in the form of royalties and export duties. Employment in the sector has been growing at a 25 percent annual rate, and with exports expected to more than triple under the current price outlook, the positive direct and indirect impacts on local economies and the country derived from this activity are anticipated to increase. While there are still logistical aspects to address, Argentina’s lithium sector presents a compelling opportunity, especially in the current context of high pressure on prices. The costs associated with brine facilities, the adoption of new technologies and the current tax regime—when compared to Chile’s variable royalties—make lithium production in Argentina highly competitive, rendering the activity profitable even in the prevailing context of low prices. Despite its considerable potential, regulatory instability and limitations for international capital flows has historically hindered Argentina’s attractiveness for investment. However, with the recent approval of the RIGI scheme, which offers fiscal benefits that positively impact projects, Argentina improved predictability, particularly regarding availability of foreign currency, to foster investment and facilitate the growth of this industry in the country.”

William Tahil, research director at Meridian International Research: “By 2023, Argentina had managed to put 80 tons of lithium carbonate (LCE) production into operation, with another 50 tons of nominal capacity commissioned in 2024, although full production from the latest two projects cannot be expected until 2026. In 2020, the government expected to have 129 tons in production by 2022, so it is three years behind. There are another eight projects in the near-term pipeline, which would add another 118 tons initially. Expansion is also underway at Fenix and Olaroz. In their 2024 ‘Portfolio of Advanced Lithium Projects,’ the Argentine government indicates a total potential production of 464,000 tons of LCE per year. That might be achievable by the end of the 2030s. At $10,000 per ton, that would be worth $4.6 billion. Argentina’s GDP is about $640 billion. If prices rocket again to over $30,000 per ton, electric vehicles would become unaffordable. Lithium cannot be transformational to the economy. The Salta region is very remote, with very difficult communications and infrastructure, difficult working conditions (high altitude) and stressed water supply. Stringent measures will have to be adopted to reduce water use, as in Chile, which will increase costs and complexity. Increasingly, the only companies that can develop projects are the large mining groups. Two groups now dominate Argentina’s lithium mining: Rio Tinto with five major projects (now that they are acquiring Arcadium) and Ganfeng with four projects. For future supply security, lithium mining needs the heavyweights, not junior mining companies.”

Jose Hofer, lithium battery specialist at consultancy SC-Insights and former analyst at Chile’s Ministry of Mining: “What we are witnessing today in Argentina’s lithium sector is the result of three decades of consistent investment and exploration in the space. Currently, the country has more than 60 projects between production and development, with more and more attention being drawn to the country in terms of mining. Ten years from now, Argentina will see its lithium production increase five-fold, while Chile won’t be able to double it. Both countries will end up having similar production levels, but through completely different strategies. Companies in the industry realize that lithium in Argentina is enforced and promoted by the provinces (Jujuy, Catamarca and Salta), despite the crises and unfortunate economic performance. The welcoming attitude of provincial government officials, with a virtuous pro-investment environment that you can sense, creates a virtuous circle for any company. The government’s involvement in the lithium sector is bounded. Given this, it’s not a coincidence that Rio Tinto increased its presence in Argentina’s lithium industry by acquiring Arcadium. In the end, the company ended up buying the portfolio of projects from the Galaxy-Orocobre merger, with the addition of one project from Livent. And it’s key to have in mind that Rio Tinto bought two projects in production: Olaroz and Hombre Muerto.”

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