Posco invests US$4bn into developing project within world renowned lithium triangle
Analyst Roskill expects significant further investment in lithium production is required to meet forecast demand.
South Korean steelmaking giant Posco has announced this week a significant investment of US$4 billion into developing a lithium brine operation in Argentina’s Salar de Hombre.
Posco Holdings chairman Choi Jeong-woo says the project will enable the company to reach its goals of carbon neutrality in the future.
“Posco, as the first Asian steelmaker to announce carbon neutrality by 2050, has been taking a leap forward to become a leading company in eco-friendly future materials by expanding the business to secondary battery materials lithium, nickel and hydrogen.”
“Lithium, the core material for EV batteries, is a key business area that will drive the future growth of Posco,” he said.
The funds will go towards developing a lithium operation on the Salar de Hombre Muerto in a bid to accommodate the rise in demand for lithium, a key component used in rechargeable batteries.
Production will initially amount to 25,000 tonnes of lithium hydroxide per annum before expanding to 100,000 tonnes per annum.
Posco hopes to commence operations in early-to-mid 2024.
With increasing demand for lithium, the ‘lithium triangle’ of Argentina, Bolivia and Chile is home to the world’s largest lithium miners including Jiangxi Gangfeng, Tianqi, Albemarle, SQM, Galaxy and Livent.
Neighbouring lithium projects could reap benefits
With Posco’s massive investment, neighbouring projects in the region may attract more investor interest.
Galan Lithium (ASX: GLN) has two advanced lithium brine projects on the Salar de Hombre Muerto in Argentina – Candelas and Hombre Muerto West (HMW).
Galan’s projects are adjacent to Livent and Galaxy’s landholding in the region and only 15km from Posco’s project where it is investing US$4 billion.
An updated economic study on developing HMW was released in December and gave the project a net present value of US$2.2 billion.
A definitive feasibility study is now underway for HMW.
Candelas and HMW have combined resources of 2.95 million tonnes of lithium carbonate equivalent grading 858 milligrams per litre of lithium.
On Friday, Galan was trading 9.77% higher for the week at $1.685.
Lake Resources (ASX: LKE) has their Kachi brine project located to the south-west.
The company announced it is bringing forward its TARGET 100 program, which aims to deliver 100,000tpa of high purity lithium to market by 2030.
A demonstration plant, based on Lake Resources’ partner Lilac Solutions’ proprietary lithium extraction technology, is currently on its way to site in Argentina.
Lake and Lilac further cemented their partnership in September last year, which gave Lilac a 25% stake in Kachi in return for its technology, engineering teams and demonstration plant.
This plant will operate for between three and four months to produce lithium chloride, which will be converted into about 2.5t of lithium carbonate.
Analyst Roskill expects strong demand for lithium products to continue growing, with significant further investment in production expected to meet forecast consumption.
Shares in Lake were trading at $1.79 on Friday, having risen a staggering 50 times since September 2020.
The lithium triangle in South America looks set to continue to be a hot spot for lithium mining long into the future with 40% of the world’s annual lithium production coming from brines in the Atacama and Hombre Muerto salars.