Authorities and experts analyzed the prospects for financing and investment in regional strategic mineral projects for the energy transition and electromobility

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) organized a Technical Panel on “Sustainable and equitable supply chains of fundamental and strategic minerals for the energy transition” as part of the “Round Table on Climate Financing and energy transition in Latin America and the Caribbean”, which took place in a hybrid format -face-to-face and virtual-, on September 1 and 2. The Roundtable is one of five Regional Forums on Climate Initiatives to Finance Climate Action and the Sustainable Development Goals (SDGs), preparatory to the next Conference of the Parties (COP27) to be held in Egypt in November 2022.

The Technical Panel on “Sustainable and equitable supply chains of fundamental and strategic minerals for the energy transition” brought together representatives of Ministries of Mining and other public entities of the countries of the Lithium Triangle with representatives of Financial Institutions, in order to identify projects that contribute to the energy transition and electromobility.

Representatives from the Ministry of Productive Development and YPF Technology (Y-TEC) from Argentina participated; the Ministry of Hydrocarbons and Energy of the Plurinational State of Bolivia; of the Ministry of Mining, Corporation for the Promotion of Production (CORFO) and Nanotec of Chile; and the Inter-American Development Bank (IDB).

In accordance with Jeanette Sanchez, director of the Natural Resources Division (DRN), the Panel seeks to promote commitments and concrete actions around climate financing, specifically how to add value to critical minerals, thinking about their contribution to the energy transition and electromobility. Minerals such as lithium and copper are critical to achieving the objectives of the Global Climate Action and Sustainable Development (SDG) agendas, to reach zero emissions by 2050, and strategic to contribute to the development of the region. The region has a high potential for reserves and production of these minerals, particularly lithium in the so-called Lithium Triangle, made up of Argentina, Bolivia and Chile. There are a number of initiatives under development to expand human and technological capabilities, as well as value addition in the value chains of these minerals that need more investment. Without adequate and timely financing, the perspectives presented by the energy transition are not sufficient for the implementation of projects focused on the development of value chains of strategic minerals. Governments, financial institutions and the organizations behind the projects are required to work together to identify and address bottlenecks or financing gaps that delay or prevent the development of sustainable and equitable supply chains of critical and strategic minerals for the energy transition in the countries of our region.

ECLAC seeks to promote these chains through the generation of knowledge, technical assistance and the promotion of dialogue, as examples, work is being done in the Permanent Forum for Technical Dialogue on Innovation, Technological Development and Adding Value to Lithium in the countries of the Triangle and in the UN Working Group for the transformation of extractive industries for sustainable development.

For her part, Pamela Morales, Undersecretary of Mining Development of the Ministry of Productive Development of Argentina, highlighted how the country’s public policies contribute to the promotion of mining investment, counting to date with investment announcements of US$ 10 billion in a portfolio of 113 mining projects (copper, lithium, gold, silver, coal, uranium and potassium), of which 18 are in production, 8 under construction, 6 in feasibility, 6 in pre-feasibility, 13 in preliminary economic evaluation, and 62 in advanced exploration. Of these, Argentina has 38 lithium projects, of which 2 are in production and expansion, 6 under construction, 2 in feasibility, 3 in pre-feasibility, 5 in preliminary economic evaluation, and 20 in advanced exploration. In the case of copper, Argentina has 20 projects, of which 1 is under construction, 1 in feasibility, 3 in pre-feasibility, 2 in preliminary economic evaluation, and 13 in advanced exploration. Finally, she stated that the country’s vision is to develop the entire value chain associated with lithium and continue advancing in adding value in the territory; train human resources and qualified suppliers; promote technological development and the strengthening of the industry; and exchange experiences, good practices and technologies with the countries of the region.

Willy Kracht, Undersecretary of Mining of the Chilean Ministry of Mining, indicated that investment in mining projects (expansion and new) is estimated at around US$70,000 million for the 2021-2030 decade, with the participation of the State and the private sector. In addition, he noted that the government is seeking to promote the construction of new copper smelting capacity, which is a challenge for the Chilean mining industry. The size of a new smelter must consider both profitability aspects of processing capacity and local emission load restrictions. On the other hand, to strengthen lithium production, in the coming months the institutional design for a New Governance of Salares will be announced, the creation of a National Lithium Company and an Institute of Lithium and Salares for the promotion of Research, development and innovation (R+D+I). The National Lithium Company will have the majority participation of the State of Chile with the flexibility to enter into associations with private parties, or share participation; it will develop capabilities throughout the production chain, from exploration to the creation of value-added products; will reinvest part of the income in generating capacities for the development of new activities and the generation of greater economic complexity in the national ecosystem.

The Vice Minister of High Energy Technologies of the Ministry of Hydrocarbons and Energy of Bolivia, Alvaro Hernán Arnéz Prado, indicated that a series of projects are being implemented with a view to strengthening a change in the energy matrix towards energy sources that are friendly to the environment. Regarding lithium production, the aim is to apply direct extraction technology by 2025. Simultaneously, there is a lithium industrialization strategy, with the aim of producing lithium cathodes and batteries that support the country’s electromobility. In addition, Bolivia has several projects such as the Center for the Development of Industrial Processes, to carry out the maturation of the development of industrial processes, from the laboratory level, piloting and industrial level; the Environmental and Hydrological Monitoring Center to carry out environmental and hydrological monitoring of the Salares de Bolivia, due to the exploitation of evaporite resources; the green hydrogen production plant integrated into one of the existing renewable energy generation plants; the green ammonia production complex that includes from the generation of electricity to the production of ammonia.

The President of YPF Tecnología (Y-TEC) of Argentina, Roberto Salvarezza, shared the projects in planning and in progress related to technological developments for the lithium sector. He indicated that work is being done with technological development to support the value chain and overcome the complexity of the processes from brine extraction, refining, to downstream stages through the construction of new plants for the production of lithium cells and batteries. In addition, he is promoting several value-added projects such as the CO2 capture and use plant for the synthesis of sodium carbonate on an industrial scale; the lithium salt separation plant by direct methods (DEL by selective adsorption); Battery grade lithium carbonate purification plant; Pilot plant for refining lithium salts; and the Lithium-Ion Battery Cell Industrial-Scale Production Plant.

Leonardo Valenzuela, Deputy Director of Mining Contracts, and Fernando Hentzschel, Manager of Technological Capabilities, of the Production Development Corporation (CORFO), together with Patricio Jarpa, General Manager of Nanotec in Chile, presented value-added and circular economy projects, which They are financed with economic income from lithium exploitation contracts in the Salar de Atacama. They indicated that CORFO is responsible for the modifications in the two lithium exploitation contracts with private companies in Chile, highlighting the protection of 15% to 25% of lithium production with a preferential price for production of higher added value; support for indigenous communities; and rent payments from 6.8% to 40%. Currently, different R&D projects are supported for an amount of US$ 511 million. One of the initiatives is Nanotec, a company in charge of the synthesis of lithium nanoparticles as additives for energy storage. The company uses nanotechnology in the study and characterization of lithium nanoparticles, with the possibility of adding value for the production of anodes and other materials that are applied in batteries. The challenges that are faced are the deficits of advanced knowledge on batteries, qualified human talent, equipment and methodologies. Other initiatives include the Circular Economy Technological Center (CIEC), which develops circular technological solutions (tyres, tailings, wear materials, solar panels, secondary materials), promotes circular value chains for mining of the future with the recovery of ore and adaptation of equipment, and develops circular R&D projects.

Marcelino Madrigal, Chief of the Energy Division of the IDB, referred to the main challenges for the countries of the region. In particular, he stated that it is necessary to strengthen the position in the supply of vital minerals for the large global markets and add value locally, with chains that point to products with a higher degree of refining and processing. In addition, he pointed out that the IDB has several cooperation instruments: i) Technical cooperation with national and subnational governments for institutional strengthening and knowledge transfer, including diagnoses, pre-investment and sector studies that support the formulation of projects. They can be earmarked for specific projects in a single country or for regional initiatives; ii) Project Specific Grant: technical cooperation programs where a donor (government or private), through an administration agreement, contributes funds destined to finance activities agreed upon in a project; iii) Investment Grant: Programs for investment in infrastructure works where, through an agreement with a donor, an investment fund is set up for previously identified works. Finally, he stated that the IDB is interested and open to continue the collaboration and explore projects related to mining and value addition that contribute to the energy transition in the region.

ECLAC expressed its commitment to continue supporting the countries by organizing this type of technical meeting on climate financing, innovation, technological development, production chains and value addition.