RAYMOND, Maine — South Korean steelmaker company Posco announced on March 21, 2022, that it is beginning a new project to mine lithium in Argentina. South Korean businesses handling lithium have found great success since 2019 and this move by Posco will further the economic boost lithium has given South Korea. Posco will invest $4 billion into lithium mining in Argentina, a move that will prove economically beneficial to South Korea, Argentina and all the workers involved in the new project.
Importance of Lithium
Lithium is a material that has grown in demand since 2012 when lithium-ion batteries first received credence for larger-sized rechargeable batteries and smartphones started selling in earnest. The overall value of lithium has doubled since 2021 and has no signs of slowing down. The value of lithium at the end of 2021 was $13,400 per ton and by March 2022, it reached $76,700 per ton.
Car manufacturers have experienced pressure to develop electric vehicles, which use lithium as a primary material. Electric vehicles have large rechargeable batteries with a lithium core and the need for lithium mining has increased as the demand for electric vehicles has grown. Electric vehicles have become popular as alternative driving machines and look to be promising investments as prices for oil and gas rise worldwide, making driving an everyday expense that is growing in cost. Another part of the demand is due to the easily sourced and found lithium. Argentina is one of the largest lithium producers, considering its heavy presence in its salt lakes and mines. Argentina is precisely the location Posco has decided to begin its new project.
Lithium Mining Importance to Argentina
Argentina’s mining industry, especially its lithium mining industry, is still undeveloped. It only started in earnest in the 1990s. The mining industry also required revamping of Argentina’s work and labor laws to make the work environment safer for potential mining workers. Since the 90s, employers have taken these implementations seriously and are working their way to employing more of Argentina’s workforce. With the importance of lithium in modern times, there is a high probability that the Argentine mining industry will expand as lithium becomes more important in everyday life.
Argentina’s lithium resources are vital to its economy and the global supply chain. Its lithium production accounts for 16% of the overall global lithium production. Argentina’s mining industry only accounts for 0.6% of the Gross Domestic Product (GDP) while the government hopes to increase its contribution to at least 3% in the coming years. An increased contribution by the mining industry is well on its way as Posco begins operations in lithium mining in Argentina.
Lithium Mining Importance to South Korea
In 2018, the eyes of the world market were on South Korea to develop and produce lithium-ion batteries. South Korea had a head start over other nations that began production of lithium-ion batteries but had not created the alliances or business dealings for lithium mining yet. South Korea’s exportation of lithium-ion batteries has grown exponentially since 2012. As of 2021, the value of Korea’s exportation of lithium-ion batteries reached $4,718,430.09 while that same value was at $1,687,494.11 in 2012.
Lithium-ion battery development and exportation created more than 2,000 jobs in 2018 in South Korea. The new opportunities presented by Posco’s deal can make at least as many additional jobs in South Korea. South Korea’s unemployment rate as of 2022 was 3.6%, having dropped from 3.8% previously. The jobs created by Posco’s new deal and arrangement with Argentina mean the unemployment rate and the poverty rate of 15% in 2020 can both drop again. Posco is taking advantage of the South Korean government’s drive to become a lithium powerhouse by 2030.
The South Korean government is determined to continue the country’s trajectory of being an international lithium-battery producing powerhouse. South Korea’s determination is why the government began investments that will last until 2030, amounting to $30 billion. To be a powerhouse and encourage companies to increase efforts to use or research lithium-ion batteries and their usage, the government is providing tax incentives and funding.
Posco and its employees will benefit from the new partnership with Argentina. The deal will result in benefits for Argentina and its miners, new jobs for Argentina and South Korea and overall advantages for both governments. The new deal will provide economic benefits for all involved. It will inspire other countries to create new partnerships as they realize the competition in the lithium trade and lithium-ion battery creation.
– Clara Mulvihill