Lithium and nickel developers in Latin America seek expansion, M&A opportunities

Mine developers in Latin America are seeking new lithium and nickel prospects as current low market prices bring acquisition opportunities for those with a foothold in the region, company executives told S&P Global Commodity Insights.

Irish critical minerals investment company TechMet, whose shareholders include the US government's International Development Finance Corp, Qatari Investment Authority and Mercuria, is seeking nickel properties in Brazil to add to its 70%-owned Brazilian Nickel subsidiary's flagship project in Piaui state.

Atlas Lithium, with near-term plans to produce 300,000 mt/year of spodumene concentrate at its Neves mine in Minas Gerais, announced Nov. 25 a drive to bring two further spodumene exploration projects in the state, Salinas and Clear, to production as soon as possible.

Atlas' strategy was "to secure as many high-quality deposit areas within [the state's] Lithium Valley as feasible," it said.

Argentina Lithium & Energy Corp, backed by automaker Stellantis, was "actively seeking" new lithium prospects in Argentina's Catamarca and Salta provinces while proceeding with a resource definition and feasibility studies at its Rincon West project, aimed to produce 15,000 mt/year of lithium carbonate via direct lithium extraction in around five years' time.

The company would also entertain talks with potential investors in its Pocitos and Incahuasi projects, it said.

Prices at multi-year lows

With nickel and lithium prices at multi-year lows, now was the time for M&A bargains, the executives agreed. And they're in a rush, expecting product prices to rise substantially as legislation promoting electric vehicle usage was introduced between 2025-2035 in various nations, increasing demand and inevitably, boosting property acquisition and development costs too.

"This is a great time to invest," Brazilian Nikel CEO Mark Travers said in an interview. "We hope to make progress [on new acquisitions] early 2025. Brazilian Nickel will be in the lowest quartile of production costs. For us, it's a gamble not to invest in nickel."

Brazilian Nickel, a $1.25 billion project, expects to be producing 27,000 mt/year of nickel and cobalt mixed hydroxide precipitate in three years for sale to refiners.

"We're a little agnostic to the overall conditions of the market," said Argentina Lithium & Energy CEO Nikolaos Cacos on a recent investor call. "The price of lithium over the past year has had a pullback but we are assured from our discussions with Stellantis that demand for lithium is still there and that the EVs driving the bulk of this demand are being manufactured."

"We firmly believe the price of lithium is going to pick up and that the market is beginning to reflect that," Cacos added.

Platts, part of S&P Global Commodity Insights, assessed the daily Lithium Triangle at $10,000/mt FOB Nov. 28, stable since its launch on Sept. 2.

Miles Rideout, VP, exploration, added: "We've been looking at property deals over the last year since the market slumped, acquisitions or potential mergers within our peer groups. We're very intent on growing and that's much easier in a down period."

The strategy at Rincon West and Antofalla North was "to pick up as much ground as possible in a mid-grade basin, adjacent to a major producer," Rideout said.

During the lithium price peak in 2022, progress at the projects was slower, Rideout noted. "At peak prices, it was challenging to find drill rigs, acquire projects and retain staff -- a superheated industry is not comfortable," he told Commodity Insights.

Direction of travel inevitable

TechMet, which aims to build up non-China-dependent supply chains, was also eyeing further investments in metals where "the most severe supply-demand dislocation is seen over the next 20 years as the energy transition accelerates ... the world will need many multiples of these metals," CEO Brian Menell said.

TechMet's portfolio includes lithium, tin, vanadium and rare earth projects, and its backing of Brazilian Nickel was based on the conviction of a global "massive shortage of nickel in the medium term," Menell said.

Recently, low nickel prices have rendered much of global production lossmaking, leading some Australian and Canadian producers to cut output and boosting lower-cost producer Indonesia's market dominance. This augured well for making nickel acquisitions in Brazil, Menell said.

"We believe Brazil could become the most important nickel producer in the world outside Indonesia, to balance China and Indonesia's dominance of the industry," he said.

The direction of travel as far as EVs were concerned was inevitable, and set to favor nickel and lithium markets in three to four years, the executives agreed.

"Governments are strongly pushing toward hybrids and EVs and the sentiment we get is that there will be a cut-throat battle at the end of this decade for companies that build EVs to get their lithium," Rideout said. "Ford has done a deal with Rio Tinto, Stellantis with us, even though we are exploration stage. Automakers absolutely have to tie up their supply chains or they will pay top dollar for their lithium."