Argentina’s lithium productionis set to increase 340% between 2024 and 2035 compared to the 56% growth forecast for Chile, according toBenchmark’s Lithium Forecast. Despite this, Chile is set to maintain its position as the top producer of lithium inSouth America.

The country is forecast to account for 44% of the region’s lithium production in 2035down from 67% this year. Argentina, by contrast, is forecast to see its share of the South American lithium industry rise from 20% this year to 38% in 2035.

Though this could change as Argentina boasts a larger project pipeline than Chile, albeit a less mature one that needs significant investment to come to fruition.

“Historically, Chile has been more attractive to mining investors due to its stability, whereas Argentina, despite its potential, has been seen as a risky bet,” said Federico Gay, principal lithium analyst at Benchmark. “Although Argentina holds vast resources, including copper and lithium, its lack of judicial andpolitical stability, high inflation, and fixed currency exchange have deterred investors.”

Chile is set to maintain top spot in South American lithium scene

Argentina’s lithium pipeline

“Argentina has attracted significant financial resources for mining projects, partly due to its untapped potential as a relatively virgin mining region,” Gay said. “The geological conditions of Argentine salars are favourable, and economic benefits have drawn the interest of developers.”

However, unlike Chile, the majority of Argentina’s potential 2030 production is yet to be operational.

In 2024, the largest lithium project in Argentina is Arcadium’s Hombre Muerto facility in theCatamarca province. Rio Tinto recently committed toacquiring Arcadium for $6.7 billion.

The largest pipeline project not currently in operation is Posco’s Sal de Oro project also in Catamarca. The project has three phases with the first currently under construction and due to come online in 2027.

Challenges for Argentina to overcome

Several factors complicate lithium production in Argentina, including geological challenges like lower evaporation rates, higher impurities, and water access issues, according to Gay.

“Argentina will need to advance DLE(Direct Lithium Extraction) technology, which is still pre-commercial, to overcome these obstacles,” Gay said. “Additionally, Argentina faces reputational risks, political uncertainty, and infrastructure limitations in the remote areas where the salars are located.”

Argentina also suffers from a level of political instability which can bring into question the long-term strength of any laws or policies that the government brings in.

“Argentina has a history of repealing laws, particularly when a new government from an opposite party comes to power,” Gay said.

Argentina’s improving mining image

AtBenchmark’s World Tourevent in London this week, Luis Lucero, Argentina’s mining minister, told delegates that mining is increasingly important for Argentina’s economy.

“There’s a shared view by political leadership, both at federal and provincial levels, that mining must be a pillar of economic revival,” he said.

Qualifying projects will enjoy a range of benefits including a flat income tax rate of 25% down from 35% for 30 years. Additional incentives such as exemption from export duties after two years are available for investments over US$1 billion.

“The RIGI announcement provides a degree of assurance to investors by addressing many concerns related to Argentina’s erratic policy changes, export duties, and currency instability,” Gay said. “By offering long-term guarantees, RIGI could significantly boost investor confidence and help unlock more of the country’s mining potential.”

In Argentina, the public perception of mining has been historically challenging. However, Minister Lucero claims this is changing.

“The public has developed an increasingly favourable perception of the role and importance of mining in the country,” he said. “Mining is no longer viewed with scepticism, but increasingly, as a sector of great potential.”

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