United Nations Conference on Trade and Development

10th MULTI-YEAR EXPERT MEETING ON COMMODITIES AND

DEVELOPMENT

25-26 April 2018, Geneva

Minerals of the future: Lithium in Argentina

By

Horacio Jurado, Director, Directorate of Mining Value Chain, Ministr of Energy

and Mining of the Republic of Argentinea

The views expressed are those of the author and do not necessarily reflect

the views of UNCTAD.

Dirección de Cadena de Valor Minera

Subsecretaria de Sustentabilidad MineraContact: hjurado@minem.gob.ar

Minerals of the future:Lithium in Argentina: trends, challenges…

3

Lithium…what is?

• Lithium is a soft, silver-white metal, with a symbol Li and atomic number 3

• Highly reactive, not found in Earth in elemental form

• Lightest of all metals

• Least dense solid element

• Highest specific heat capacity

• High electrochemical potential

4

Lithium 2022 7.700 MM USD

2.000 MM USD

95.000 MM USD

125.000 MM USD

Lithium

Copper

Gold

The total Lithium market

is a little part vs. Copper

and Gold

Lithium is not a standard commodity. The prices of lithium

carbonate and hydroxide are negotiated individually through

contracts between buyers and sellers – there is little

transparency in pricing, but some price recognition is available

through analysis of trade statistics

Gold Lithium

Copper

48%

30% +80%While for Gold and Copper 10 producers have only 30% and 50%

market share.

4 Lithium producers have more than 80% market share

Source: Subsecretaría de Desarrollo Minero

5

The Global Lithium Mining Market segments

➢Source:

• Brines (continental,

geothermal, and oil field)

• Hard rocks

➢Type:

• Lithium carbonate (

Li2CO3)

• Lithium hydroxide

(LiOH)

• Lithium Chloride

(LiCl)

➢Application:

➢Batteries

➢Glass

➢Ceramics

➢Air conditioning

equipment

➢Greases

➢Pharmaceuticals

6

Potential sources of Lithium worlwide

Worlwide Lithium deposits

Salars

Pegmatites and Granites

Clays

Petroleum brines

Geothermal brines

Zeolites

Argentina

Zimbabwe

China

Portugal

Czech. Rep.Austria

Germany

58%Salars

26%Pegmatit

es & Granites

7%…

3%…

3%…3%

Zeolites

% Lithium deposits distribution

Canada

EEUU

Mexico

Bolivia

Chile

Finland

Serbia

Australia

Brazil

Source: Subsecretaría de Desarrollo Minero

7

Lithium Resources and Reserves

Reserves 2016 (67,4 MM t LCE)

China 25%

(17,1 MMt)

Argentina9%

(5,1 MM t)Bolivia 0%

Chile 50%(34,1 MM t)

Australia 10%

(7,2 MMt)

Rest of the world

6% (3,9 MM t)

Bolivia 30%(47,9 MM t)

Chile 21%(34,1 MM t)

China 17%(27,1 MM t)

Rest of the world8%

(12,6 MM t)

Australia 7%

(11,6 MM t)

Argentina 17%

(26,8 MM t)

Resources 2016

(160,2 MM t LCE)

Source: Subsecretaría de Desarrollo Minero

The Lithium

Triangle

68%

8

Production 2016(202 Mt LCE)

Reserves(68,5 MM t LCE)

Argentina 9%

Bolivia 0%

Chile 50%

Australia 10%

Rest of the world 6%

China 25%

Lithium production vs Reserves

Source: Subsecretaría de Desarrollo Minero

76064

74468

30851

122342128 5319 1064

China6%

Chile

38%

Australia

38%

Argentina

38%

9

Batteries demand evolution

Ceramic and Glass: 15%

Other uses: 15%Other Uses: 11%

Air conditoning

Polymers: 5%

Metalurgy: 6%

Grease & lube:9%

Ceramic and Glass: 35%

Batteries

29%

Ohter uses: 10%

Air conditioning 3%Polymers: 5%

Metalurgy: 5%

Grease and lube: 8%

Ceramic and Glass: 30%

Batteries: 39%

20262012 2016

Batteries: 70%

10

Al-Li

Aircraft

Materials

Lithium: From deposits to final use

DEPOSITS

Brines

Mineral

concentrate

Air

conditioning

Glass &

CeramicsPharmaceutical

Lithium

Grease

Non-

recharge

Batteries

CO2

Scrubbing

Catalysts

Primary

Batteries

Elastomer

Production

Lithium

Hydroxide

Lithium

Carbonate

Lithium

Chloride

Metallic

Lithium

Steel continuos

casting

Aluminium

Industry

Li-ion Batteries

Mineral

deposit

s

END USES AND APPLICATIONSPRODUCTS

11

Lithium production, some facts.

• Battery grade lithium products have significantly higher costs to produce from mineral

sources than from salt lake brines

• But brine operations have significant lead times to develop and ramp-up production

• Mineral operations’ higher cost of production is driven by a technically more complex and

energy intensive process to reach battery grade lithium carbonate and hydroxide products

• Brine operations also exploit economies of scale and don’t have the associated expenses

of hard rock deposits

12

Lithium Price evolution (LCE)

3870 4220 4390 50506500

7475

9100

16500

8% 4%13%

22%13%

18%

45%

0%

20%

40%

60%

80%

100%

120%

140%

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2011 2012 2013 2014 2015 2016 2017 2018

Lithium price - LCE USD/ton

$ USD % Acumulated variation

Source: Metalary.com

13

Lithium demands - Car batteries

Y Country Proposal Status

2025

Norway

Change to taxes and incentives to

achieve only zero or low emission

sales

Agreement amongst all

relevant parties

Netherland

s

Change to taxes and incentives to

achieve only zero or low emission

sales

Passed by

parliament's

lower house –

needs approval

by upper house

EEUU

No country-wide proposal although

California aims to have a 1.5 million

ZEV fleet

State approved

mandate

China“New energy” vehicles to make up at

least 20% of vehicle sales

Approved in latest five

year plan

2030

Japan50 to 70% of vehicle sales to be of

“next-generation” vehicleGovernment set target

India End the sale of petrol and diesel cars Policy proposal

Germany

Change to taxes and incentives to

achieve only zero-emission vehicle

sales EU-wide

Non-binding resolution

by parliament's upper

house

2040

FranceEnd the sale of cars emitting

greenhouse gasesPolicy proposal

England

End the sale of all new

conventional petrol and diesel

cars and vans

Policy proposal

Source: woodmac.com/Metals & Mining

• Since 2010, battery costs have fallen by more than 70%

• The viability of electric vehicles will ultimately depend on how well each

car can compete across segments and geographies

• EV stock around the world to increase from 2 million in 2016 to 125 million

in 2035

• By 2035, 1.8 million b/d of global oil demand will be displaced by Evs

• Buses LIB can be push the demand

14

Lithium demands – BESS (Battery Energy Storage Station)

Tesla world´s largest Li-On battery

South Australia

100 MW/ 129 MWh.

Capacity: 30.000 homes for an hour

AES & SIEMENS – Escondido, California,

EEUU

30 MW/ 120 MW/h

Capacity: 20.000 homes for about 4 hours

15

The Lithium Triangle (Argentina, Bolivia and Chile)

Chil

e

Boli

via

Source: Dirección de Infraestructura Minera/ Subsecretaría de Sustentabilidad minera

16

Argentina Lithium mines and projects status

2 mines in Production. Both expanding

production capacity

2 mines under Construction

10 projects from Feasibility to Advanced

Exploration

> 40 projects in Early-Stage Exploration

phase, 6 of them from pegmatites deposits

17

3818

20

50

50

2515

2016

25

20

35 331

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

2017Production

capacity

Amp. Olaroz Cangrejillos

Jujuy

Caucharí-Olaroz

Rincón Pozuelos Sal de los Ángeles Centenario

Salta

GallegoProject

Sal de Vida Amp. Mina Fénix TresQuebradas

Catamarca

2022 Projectedcapacity

Ton

so

fLC

E

FMC

Lit

hiu

mC

orp

.

Gal

axy

Res

ou

rces

Lim

ited

Eram

et

Lith

ium

-XEn

ergy

Co

rp.

Ab

erd

een

Inte

rnat

ion

alIn

c.

Po

sco

-Li

thea

Enir

giG

rou

pC

orp

.A

DY

Res

ou

rces

Ltd

Lith

ium

Am

eric

as–

SQM

-JE

MSE

Oro

cob

re L

td–

JV–

Toyo

taTs

ush

oC

orp

.

Oro

cob

re L

tdTo

yota

Tsu

sho

Co

rp.

JEM

SE

Ever

ligh

tR

eso

urc

es

Neo

Lith

ium

Ltd

.

18

Investment projection

-

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

2017 2018 2019 2020 2022 Acumulado

USD

M

Tres Quebradas

Gallego Project

Sal de Los Ángeles

Cangrejillos

Salar de Pozuelos

Sal de Vida

Salar de Centenario Ratones

Salar del Rincón

Caucharí-Olaroz

Mina Fénix

Salar de Olaroz

38

1.301 1.377

1.057

17030

3.973

19

Employment projection

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

2017 2018 2019 2020 2021 2022

Emp

loye

es

Tres Quebradas

Gallego Project

Sal de Los Ángeles

Cangrejillos

Salar de Pozuelos

Sal de Vida

Salar de Centenario Ratones

Salar del Rincón

Caucharí-Olaroz

Mina Fénix

Amp. Olaroz

Olaroz483 483

1.193

2.538

2.838

3.408

20

Lithium exports projection (MM USD)

0

500

1000

1500

2017 2018 2019 2020 2021 2022

USD

(M

M)

253 253305

801

1412

2000

At 75% of projected production capacity and 9.000 USD/t LCE price

1848

21

NOA Region opportunities…and challenges

Source: Dirección de Infraestructura Minera/ Subsecretaría de Sustentabilidad minera

Prices are still rising…

• Infrastructure (Roads, railways, gas,

electricity, telecomunicacions)

• Skills development for the specific salar

production system

• Accelerate the process between projects and

production

• Local development plans

• Consider seriously the impact in local and

aboriginal communities.

• Hydrogen cells and graphene can be

competitors.

• Recycling by 2040 would cover 50% of the

demand for lithium.

• Australia alone could supply the demand for

world lithium for the next 60 years.

• Technological advances can create new

sources.

22

Commissioning and process residence times are a specific risk to brine production and will hamper the progress of

expansion. These obstacles for new brine developments may sustain the current market deficit in the short term.

Q3

2010

Definitive

Feasibility

Published

Scoping Study

Published

Sept May

2008 2009

Initial Orocobre

drilling program

Sept

2016

Nameplate

production 17.5

kt/a battery grade

lithium carbonate

forecast

Mar

2015

Construction and

commissioning

completed

Orocobre and

Toyota Tsusho

Announce JV to

develop the project

Jan

2010

The provincial

government take an

equity interest in

the project and

construction is

approved

Jun

2012

Project Financing

Completed

US$229M including

70% debt provided

by Mizuso

Dec

2012

AUD$50M

placement

announced to

fund ramp-up

working capital

requirements

Feb

2015

Mar

2016

AUD$85M

placement

announced to

meet debt

obligations

LOCATION