Last week a piece of news shook the auto industry. For the first time, a Tesla electric car, the Model Y, leads the sales ranking globally. In the first quarter of the year it relegated the Corolla, one of Toyota's flagship models. According to the consultancy Jato Dynamics, between January and March Tesla shipped 267,200 units of its Model Y against the 256,400 Corolla, which is based on fossil fuels.
This is only the first indication of the phenomenal conversion of means of transport. The advance of hybrid and electric cars has a full impact on the demand for two critical inputs, lithium and copper, which Argentina has in abundance. Today the country is the world's 4th largest exporter of lithium, which is used in batteries, and "has enormous geological potential to position itself among the first producers of copper," says a report by the CAEM, which groups mining companies.
The overall increase in demand is partially reflected in the statistics. In 2022, Argentine mining exports totaled US$3.857 billion. Of the total, lithium accounted for US$600 million. Most of it was gold and silver sales. Abeceb projects a slightly higher figure for this year (2%), but with lithium climbing to US $ 1,000 million, "a little because of the increase in international prices and another little because a new project comes into operation," summarizes Natacha Izquierdo, economist at that consultancy.
Copper deserves special consideration. It is a key mineral for both automotive electrification and the transition to clean energy. For these two reasons, copper demand will triple in the next two decades, according to data from the InternationalEnergy Agency. It is estimated that there are more than 10 million electric vehicles in use (many of them are Tesla) and they estimate that they may reach 66 million by 2025.
Such figures illustrate the growth potential of Argentine mining. Lithium, clarifies economist Marcelo Elizondo, is not a classic commodity. "Even primary production requires chemical inputs, transport and logistics, financing and related professional services. It's an industry that spills over the entire chain," he says. However, he stresses that "the long-awaited local production of batteries is only possible when there is more scale", that is, when the fleet of electric cars in Argentina grows.
It sounds a bit far away. According to data from ACARA (the chamber of dealers), in 2022 only 7,842 "unconventional" units were patented: 7,588 hybrids and 260 pure electric. The figure, however, represents an increase of 33% compared to 2021 and 232% compared to 2020. "Last year not only did the unit business grow, but 14 models were added to the offering," the report says. Toyota and Ford accounted for nearly 92% of electrified 0km sales.
Export potential Lithium production has made more notable advances than copper. Mining companies estimate that Argentina could export US$12 billion by 000 if regulatory frameworks are adapted to encourage activity. At present, Izquierdo recalls, "there are investments delayed by the import trap and the impossibility of transferring foreign currency from profits abroad."
Automotive electrification plus the advancement of renewables represent a huge opportunity. The world's leading producer of copper is Chile. In 2022, it exported a total of US $ 50,000 million, "a figure equivalent to that of the Argentine agribusiness sector," says the CAEM. Copper brings in $19.500 billion annually for Peru. Argentina stopped producing copper in 2018, with the closure of the La Alumbrera mine in SanJuan.
But there are about 20 projects in dance. These include Josemaría (in charge of the mining company Lundin Mining) and El Pachón (Glencore), Taca Taca (First Quantum), Los Azules (McEwen), Filo del Sol (Filo Mining), Altar (Aldebaran), Valle de Chita (Minsud) and San Jorge (Solway). "If the most advanced ones were to materialize, local copper production could represent about 25% of Chile's," warns the CAEM.
The same goes for lithium. There are two active deposits in the country (Mina Fénix and Salar Olaroz) and both have expansion plans underway. Currently, the largest producer of this key input for batteries is Australia (54.3% of the total). Next are the Salar Atacama of Chile (24%), China (14%) and Argentina, with 6.2%. The difference is that its exploitation requires "an average investment of US $ 1,000 million, this is three times less than that of copper," says Izquierdo.
Lithium is used in the cathodes of car batteries. Copper, a metal valued for its ability to conduct electricity, has a much greater incidence. In a combustion car, it is basically used in wiring and each unit carries, on average, 23 kilos. In a hybrid vehicle it goes to 39.3 kilos; for a "plug-in" hybrid vehicle at 60.3 kilos; and in a pure electric it reaches 83.2.
The rise of electromobility is produced by the effect of the incentives of some governments ("in the US, direct loans of up to US $ 7,500 are granted for the purchase of new electric vehicles and US $ 4,000 for used ones," says the Argentine ambassador in Washington, Jorge Argüello), and by the greater awareness of environmental care.
This despite the fact that an electric car is more expensive than traditional combustion cars. Without going any further, Tesla's Model Y, the world's best-selling car, costs twice as much as Toyota's Corolla. While the price of the Tesla Model Y in the United States starts at US $ 47,490, while the Corolla and RAV4 (which occupy the 2nd and 3rd place) are sold at US $ 21,550 and US $ 27,575, respectively.
Lights and shadows in automotive
Mining companies say the sector has a great opportunity to generate foreign exchange. The country "has enormous potential" to produce lithium and copper, two of the critical minerals for assembling vehicles with electric traction. Marcelo Elizondo, specialist in international trade and director of the consultancy DNI, points out that "the entire automotive industry in the world is redefined and that means redefining what multinationals do in each country."
In this sense, Argentina (it is one of the 30 countries where cars are manufactured) "may be eligible within multinationals if it develops an ecosystem to produce electric vehicles," says Elizondo.
In any case, the expert clarifies that for that "new suppliers will be needed; prepared human resources, investments in research and development, and the incorporation of new technologies". As in any reconversion process, Elizondo points out that not everyone will receive good news.
He says it is very likely that "there are current auto parts that will be affected. Those who produce inputs for mechanical and combustion cars will have to be reconverted," although not immediately.
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Copper and lithium, the minerals that the world comes to look for in this region
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