(Corrects paragraph 10 to make clear that laid off workers were from contractors of Livent, not company employees)
BUENOS AIRES, April 16 (Reuters) - Argentina’s fledgling lithium sector has been torpedoed by the global spread of coronavirus, with operations stalled by a nationwide crackdown and some projects being abandoned as the pandemic has sharpened economic concerns in the country.
Argentina is part of South America’s so-called “lithium triangle,” a major sources of the light metal that is key to the development of electrified vehicles. It has been pushing new projects to catch up with neighboring lithium powerhouse Chile.
Those now are hanging in limbo, threatening what the country had hoped would one day be a $2.1 billion lithium export market, according to a government presentation, up from $190 million last year when it shipped 50,000 tonnes of the white metal.
“The quarantine is going to affect the industry across the board,” said Emily Hersh, a managing partner at Buenos Aires-based advisory DCDB Group, adding the longer-term hit would be reduced global demand for electric cars.
“The bigger issue for Argentina is going to be the global recession that’s going to delay electrification,” she said.
The pandemic has already stymied a U.S. push to develop lithium, while miners have warned the virus could hit to sales and prices further this year.
Argentina President Alberto Fernandez, who imposed the lockdown in mid-March, has moved to put mining on a list of essential sectors, but that has done little to help restart operations with transport snarled by the virus.
“As far as I know, lithium companies have made efforts to start their exports, some cargo that was pending in the port. But demand is low; everything is paralyzed”, said Alberto Carlocchia, president of Argentina’s mining chamber.
“I don’t think that the main mining operations are going to be capable of operating even at 50% of normal. Not because they don’t want to, but because of the transportation restrictions for people to move between provinces,” he added.
U.S.-headquartered Livent Corp, which had suspended operations at its Argentine facility leading to layoffs at some local contractors, did restart them in April, though withdrew its 2020 guidance due to the global uncertainty created by the pandemic.
Others went further. French mining and metals group Eramet scrapped plans for a $600 million Argentine lithium project due to economic uncertainty created by the pandemic. It had aimed to produce 24,000 tonnes of lithium carbonate equivalent per year in a first phase.
Pierre-Alain Gautier, the director of strategy at Eramet, said that Argentina’s volatile economic climate had made it more challenging to finance the project, which had “got more and more difficult since the beginning of coronavirus crisis.”
Lithium Americas, which had been aiming to complete construction of a plant in northern Argentina by early 2021, said in March it had suspended work on the project due to government restrictions linked to the pandemic.
This had seen it reduce workers at the site to 93 personnel from 850 previously and could hit the project’s time frame.
“I don’t know the whole impact of this. There’s too many unknowns at this point,” Jonathan Evans, the firm’s president and CEO told Reuters, adding the global situation was “changing every day”.
“However, I am still confident that in 2021, at some point, we should be able to complete the project.”
Argentina’s push to grow lithium exports had already faced challenges, with rivals such as Australia and Chile developing deposits faster and a global price drop hurting investment. (Reporting by Marina Lammertyn; Editing by Adam Jourdan and Cynthia Osterman)
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