The wave of falling lithium prices due to overcapacity is not over yet. South American lithium exporter Argentina will have four new lithium projects put into operation in the short term. The sharp increase in supply meets sluggish demand, which means that the continuous decline in lithium prices may worsen the situation.

According to media reports on Saturday, four new lithium projects in Argentina will be put into operation over the next few weeks to months. This will nearly double Argentina's lithium production capacity and further strengthen its position as a major global lithium producer. According to reports, after the four new projects are put into operation, Argentina's annual production capacity will increase by 79%, reaching the equivalent of 202,000 metric tons.

In the past decade, despite a large influx of capital into Argentina's rich lithium mining industry, only one new lithium mine has been put into operation in the country. However, the newly inaugurated government of Millay in Argentina is speeding up the development of lithium resources and promoting lithium exports to boost the economy.

These new projects, located on the salt lake of the Andes Mountains in South America's “lithium triangle” region, are the key for new President Javier Millay to exchange foreign exchange. Millet urgently needs to increase export revenue in exchange for the US dollar to boost the Argentine economy and achieve its reform goals.

A number of Chinese miners will be responsible for the development of these new lithium mines. For example, Centenario Ratones, in which China's Qingshan Holdings and French miner Eramet SA participate, will hold a commissioning ceremony next week. The other three projects are Zijin Mining's Tres Quebradas, Ganfeng Lithium's Mariana, and South Korean steel giant Pohang Holdings's Sal de Oro.

In addition to this, Rio Tinto Group also plans to build a mine with an annual output of 3,000 tons in Salta Province, Argentina by the end of this year.

However, for the global lithium market, the emergence of these additional production capacities comes at a time when demand is sluggish. Lithium stocks are building up due to uncertain demand prospects for electric vehicles. The spot price of lithium carbonate in China has fallen to its lowest level since August 2021.

Although the new production capacity will not be fully put into use immediately, the certainty of future supply increases will clearly further increase the downward pressure on lithium prices. According to media estimates, global lithium production will reach 1.4 million tons this year. Miners involved in these projects all need to address the challenge of imbalances between lithium supply and demand.