South Korean steelmaker POSCO has inked a deal to acquire lithium mining rights in Argentina from Australia`s Galaxy Resources, in a deal worth $280 million.
The deal, said the company, will secure stable lithium supplies for
its battery material manufacturing affiliate POSCO ES Materials.
Deal gives POSCO a package of mining
tenements for 17,500 hectares of land in the northern area of the Salar
del Hombre Muerto salt flat.
The Asian firm, which has been trying to ramp up its lithium business
as the global steel market suffers from oversupply and protectionist
policies, also said it planned to build a lithium plant in the South
American country. The facility is expected to produce 25,000 tonnes of
the white metal for 20 years, starting in 2021.
Lithium, a key ingredient in the making of batteries that power
electric vehicles (EVs), has seen demand soar in recent years as more people shift away from cars powered by fossil fuels.
Experts expect the need for the commodity from battery makers alone to jump 650% by 2027, while overall demand is forecast to rise more than threefold in the next nine years.
Despite bullish forecasts, lithium may have a funding problem. Banks
are wary, citing everything from the industry’s poor track record on
delivering earlier projects to a lack of insight into a small, opaque
market. Without more investment, Bloomberg reported, supplies of the commodity could remain tight, sustaining a boom that already has seen prices triple since 2015.
In May, Galaxy announced it had agreed to sell the Korean firm a package of tenements in the Salar del Hombre Muerto (The Dead Man’s salt flat) in northern Argentina.
It said at the time it would invest the proceeds from the deal in its
flagship Sal de Vida (Salt of Life) lithium and potash brine project,
also located in Argentina, within an area known as the Lithium Triangle,
which straddles the border with Bolivia and Chile.
POSCO has hit some legal challenges to acquire mining rights for salt
lakes in South America. This has led the company to develop alternative
technologies to extract lithium from lithium minerals and used
batteries instead of saltwater. According to the steelmaker, it is the
only company in the world capable of producing lithium from three
different sources.
Assets
are located in Argentina, within an area known as the Lithium Triangle,
which straddles the border with Bolivia and Chile. (Map courtesy of Lithium Power International, which is developing The Maricunga Lithium Brine project in northern Chile.)