Latin America News Q2 2018

12 LATIN AMERICA NEWS / Q2 2018 , Recent efforts by Chilean government agency Corfo to block Chinese firm Tianqi Lithium from acquiring a 32% stake in lithium giant Sociedad Quimica y Minera de Chile seem to be sending an alarming message to foreign firms who originally sought investment in Chile, and are now perhaps changing their target region to neighboring Argentina. With heavy development happening in the country, Chinese firms may start taking a more serious look at companies with assets in Argentina, which include SQM, Lithium X Energy, Millennial Lithium Corp., Orocobre Limited, and NRG Metals Inc. Foreign investors have been ramping up interest in South America’s precious lithium brines, which are much cheaper to produce than Australian hard-rock mining. This attention zeroes in on a region known as the Lithium Triangle, which spans Chile, Bolivia, and Argentina. However, these three aren’t seen as equals on the international stage. Bolivia’s far-left government turns away most foreign investment, leaving it far behind in the dust. But it seems that Chile and Argentina are duking it out for lithium supremacy-a duel that’s been spun around in recent years, as major government changes in both countries are seemingly swapping their reputations. Lithium X Energy and the sale of its assets in Argentina show a completely different attitude towards the Chinese drive for lithium supplies-Having successfully completed an arrangement that netted the company an all-cash deal worth $265 million, to Chinese investment firm Nextview New Energy Lion Hong Kong Ltd. Late last year, NRG Metals Inc. sealed its own deal with Chinese high-purity lithium manufacturers Chengdu Chemphys Chemical Industry Co., Ltd (“Chemphys”)- Successfully meshing their new partners into the strategy going forward, which recently began drilling on its Salar Escondido Project. What the lithium market is witnessing is the beginning of a shift to Argentina will inevitably boost interest and investment, and benefit companies such as Lithium X Energy, Millennial Lithium Corp., Orocobre Limited, and NRG Metals Inc. ARGENTINA’S LITHIUM ADVANTAGES (AND CHALLENGES) Since President Mauricio Macri took power in 2015, Argentina opened itself up to foreign capital, and has set its sights on surpassing Chile on the way to becoming a lithium superpower. As of December 2017, the country supplied about 16% of the world’s lithium-However, it has set the new goal of supplying as much as 45% of the market. While Argentina certainly has the lithium supplies to meet these ambitious goals, it lags in supplying the brain trust to accomplish the feat. The country is swimming with doctors and lawyers, but has a dearth of skilled workers and technical personnel for lithium. “There is a real potential that Argentina will leapfrog over Chile in terms of production in five years’ time,” Richard Seville, CEO of Orocobre Limited, told Reuters during a visit to the mine. “It is going to be a very important player.” Orocobre produces 14,500 tonnes of lithium carbonate per year at its Olaroz salt flat mine. But when the company welcomed on partner Toyota Tsusho Corp, plans for the mine suddenly projected a doubling of its total production to 35,000 tonnes by 2019. As of late 2017, Argentina held the rank of 3rd largest lithium producer in the world at 30,000 tonnes per year, which is less than half of Chile’s annual output of 70,000 tonnes. But with projects like Orocobre’s, Lithium X’s, and NRG Metals’ getting boosts from foreign interests (mostly from East Asia), there appears to major shift happening. LITHIUMTRIANGLE LEAPFROG While Chile seems to be putting up obstacles against Tianqi Lithium, the agency responsible for the country’s lithium assets Chinese Lithium Acquisition Spree Shifts from Chile to Argentina WhileonerecentmajorChinese lithiumacquisitionwasbeingaggressivelyhindered inChile, anotherwasbeingapproved inneighbouringArgentina-anall-cashdealworth$265million.