Exports of mined commodities from Argentina hit the highest in 10 years in 2022 driven by demand for EV battery metals, notably lithium.
Argentina made $3.86 billion from mined commodity exports last year, Reuters reported, citing government data, with lithium exports alone skyrocketing by 234% in 2022. The battery metal accounted for almost 20% of Argentina's mining exports.
Argentina has the world's third-largest lithium reserves, which represent 9% of global reserves. Together with Chile and Bolivia, the country accounts for 60% of the world's lithium reserves.
JP Morgan has estimated that thanks to its lithium riches, Argentina could become the third-largest producer of the metal by 2030.
Indeed, there is no sign of lithium demand subsiding: in the first two months of this year, Argentina's exports of the metal were more than twice the amount it exported in January and February 2022, with the February exports bringing in a record $58 million in revenue, Reuters noted.
Argentina's economy ministry expects lithium export revenues this year hitting $6 billion this year, with two new projects scheduled to begin production soon and two more expanding to boost output as well.
While the long-term outlook for lithium-and EVs-appears to be still robust, lithium prices have recently taken a dive as demand for EVs weakens and sales decline. The sales decline was a result of high prices but with lithium available in abundance, these prices might come down, making EVs more affordable and spurring renewed demand.
Meanwhile, however, some carmakers are exploring a future in which EV batteries won't feature lithium at all. This could compromise any potential export growth plans by Argentina and its lithium-rich neighbors if it pans out.
Yet challenger technology normally takes quite a while to go from the lab to the market and it has to prove superiority to incumbent technology, which has not yet happened in the battery space despite numerous reports of breakthroughs in alternative technologies to the lithium-ion one used in EVs today.
By Charles Kennedy for Oilprice.com
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