China’s Ganfeng Lithium, one of the world’s top producers of the commodity used in electric vehicle batteries, has inked an initial deal to explore setting up a batteries plant in Argentina.
The Chinese company, which counts automakers Tesla and BMW among its customers, is developing the Cauchari-Olaroz lithium brine project in Argentina’s northwestern Jujuy province.
The project, in which Ganfeng has a 51% stake, is slated to produce of 40,000 tonnes of lithium carbonate equivalent per year and is scheduled to start production in the first half of 2022.
The non-binding agreement to explore building a plant was signed with Argentina’s Ministry of Productive Development and the Jujuy provincial government.
The parties also agreed to look at the viability of joint development of projects as well as investment opportunities in lithium exploration and extraction, a statement from the Argentinian ministry said.
“We want to support the industrial development of Argentina to make it one of the most important lithium-producing countries in the world,” Ganfeng Chairman Li Liangbin said in that statement.
The firm is also pursuing a lithium brine project in Argentina’s Salta province, near Jujuy, and expects to this year receive the environmental assessment permit needed to start construction.
Ganfeng has been strengthening its investment and development capability in the market. In early May, the company announced the acquisition of lithium explorer and developer Bacanora Lithium (LON:BCN), becoming the sole owner of the Sonora project in Mexico.
The mine is expected to begin production in 2023 and produce 35,000 tonnes of lithium per year once at full tilt.
Beijing announced last year a development plan for the so-called new energy vehicle (NEV) industry in 2021-35. It is targeting a 20% share of NEVs in the country’s total vehicles sales by 2025, which supports the demand for battery materials in the long run.
An recent report by the International Energy Agency (IEA) recommends governments start stockpiling battery metals, noting that lithium demand could increase 40-fold in the next 20 years. IEA executive director Fatih Birol said this would become an “energy security” issue. China dominates lithium processing, while mine supply largely comes from Chile and Australia.